Oil settled marginally lower on Wednesday, and prices were on course for their steepest annual decline since 2020 as investors weighed US economic growth and assessed the risk of supply disruptions from Venezuela and Russia.
Brent crude futures closed down 14 cents, or 0.2 per cent, at $62.24 a barrel, while US West Texas Intermediate crude eased three cents, or 0.05 per cent, to $58.29.
Both contracts have gained about six per cent since December 16, when they plunged to near five-year lows.
"What we've seen over the past week is a combination of position-squaring in thin markets after last week's breakdown failed to gain traction, coupled with heightened geopolitical tensions including the US blockade on Venezuela, and supported by last night's robust GDP data," IG analyst Tony Sycamore said.
US data showed the world's largest economy grew at its fastest pace in two years in the third quarter, fueled by robust consumer spending and a sharp rebound in exports.
Still, Brent and WTI prices are on track to drop about 16 and 18 per cent, respectively, this year, their steepest declines since 2020 when the Covid pandemic hit oil demand, as supply is expected to outpace demand next year.
On the supply side, disruptions to Venezuelan exports have been the most significant factor pushing up oil prices, while Russian and Ukrainian attacks on each other's energy infrastructure have also supported the market, Haitong Futures said in a report.
More than a dozen loaded vessels are in Venezuela waiting for new directions from their owners after the US seized the VLCC Skipper earlier this month and targeted two additional vessels over the weekend.
"A choppy holiday trade looks to be the norm here with the Venezuela blockade being the focal point into the holiday weekend," said Dennis Kissler, Senior Vice President of Trading at BOK Financial.
Additionally, oil shipments from Kazakhstan via the Caspian Pipeline Consortium are set to drop by a third in December to the lowest since October 2024 after a Ukrainian drone attack damaged facilities at the main CPC export terminal, two market sources said on Wednesday.
US crude inventories rose by 2.39 million barrels last week, while gasoline stocks increased by 1.09 million barrels and distillate inventories rose by 685,000 barrels, market sources said, citing American Petroleum Institute figures on Tuesday.
The US Energy Information Administration is due to release official inventory data on Monday, later than usual due to the Christmas holiday.
(Reporting by Arathy Somasekhar in Houston; Additional reporting by Sam Li in Beijing and Siyi Liu in Singapore; Editing by Mark Potter, Matthew Lewis and Chris Reese)
