Oil prices were down about $3 a barrel on Thursday on higher U.S. gasoline stockpiles and after a European Central Bank (ECB) rate hike stoked demand worries, while returning oil supply from Libya and the resumption of Russia’s gas flows to Europe eased supply concerns.
Brent crude futures lost $2.44, or 2.3%, to $104.48 a barrel by 12:24 p.m. EDT (1624 GMT). U.S. West Texas Intermediate crude futures were down $3.06, or 3.1%, at $96.82 after a 1.9% drop.
Both were down more than $5 earlier in the session.
U.S. gasoline futures fell 15 cents, or 4.5%, to $3.13 a gallon following a jump of 3.5 million barrels of the commodity in storage last week, U.S. government data showed on Wednesday, far exceeding analyst forecasts.
“Oil’s main protagonist is gasoline and the perceptions around gasoline demand destruction,” said Robert Yawger, executive director of energy futures at Mizuho.
Oil futures trading volumes have also been thin and prices volatile as traders attempt to square weaker energy demand with tighter supply resulting from the loss of Russian barrels after the country’s invasion of Ukraine.
Flows through Russia’s Nord Stream 1 natural gas pipeline, which runs under the Baltic Sea to Germany, partially resumed after being shut for maintenance on July 11. The pipeline had already run on reduced volumes following a dispute sparked by Russia’s invasion of Ukraine.
“The resumption of Nord Stream gas flows appears to be conjuring up images of a more conciliatory posture on the part of Russia regarding continued movement of crude and products into Europe in the coming weeks/month,” said Jim Ritterbusch of Ritterbusch and Associates in a note.
The European Central Bank on Thursday joined many other central banks in raising interest rates, focusing on fighting runaway inflation rather than the economic downturn, which can weigh on oil demand.
The Bank of Japan maintained ultra-low interest rates to stimulate stalling economic growth.
On Wednesday, Libya’s National Oil Corp (NOC) said crude production had resumed at several oilfields after the lifting of force majeure on oil exports last week.
One of Canada’s major oil export arteries, the Keystone pipeline, was operating at reduced rates for a third day on Wednesday, operator TC Energy said.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.