Crude oil prices have seen a downturn on Wednesday, following a rapid rally that brought the prices to a 10-month high of $95 per barrel on Tuesday. The Brent crude slipped around one percent, settling near $93 per barrel. This shift in the market suggested that the recent surge might have been excessive.
The decline was also observed in West Texas Intermediate (WTI) for November delivery, which decreased by 1.1 percent, declining to $89.45 per barrel at 6:19 a.m. The October contract, due to expire on Wednesday, dropped by 1.4 percent to $89.92 per barrel. Brent for November settlement slid by 1.1 percent to $93.30 per barrel after nearing $96 during intraday trading on Tuesday.
The preceding rise in crude prices was primarily due to supply restrictions imposed by OPEC+ powerhouses, Saudi Arabia and Russia, together with optimistic economic forecasts from the world's largest economies, the United States and China. This price increase sparked discussions about oil potentially returning to $100 per barrel, a situation that could present challenges for central bank authorities, including the Federal Reserve, who were set to determine policy later on Wednesday.
Market indicators suggest a tightening in supply and demand. The American Petroleum Institute reported that nationwide inventories fell by 5.25 million barrels last week, which included a drawdown at the Cushing hub according to sources familiar with the data. AlphaBBL Corp.'s separate evaluation also indicated a reduction at the Oklahoma storage site. Official data is expected to be released later on Wednesday.
Moreover, timespreads continue to display a robust tone. The difference between WTI's two nearest December contracts stood just below $10 per barrel in a bullish backwardated structure, more than double the figure from one month ago.
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