Oil Down, Investors Begin Profit Taking Over Build in U.S. Inventories

© Reuters.

By Gina Lee

Investing.com – Oil was down on Friday morning in Asia, after rising to seven-year highs earlier in the week. Investors also digested a bigger build in U.S. crude oil inventories.

Brent oil futures fell 1.95% to $86.66 by 11:56 PM ET (4:56 AM GMT) and WTI futures slid 2.17% to $83.69.

The black liquid’s recent rally appeared to run out of steam on Thursday when Brent and WTI futures ended the session with slim losses. They have gained more than 10% so far in 2022 as supply concerns increased.

"Investors made short-term adjustments in their positions after an increase in U.S. inventory and ahead of the weekend," Nissan (OTC:NSANY) Securities general manager of research Hiroyuki Kikukawa told Reuters.

Investors digested Thursday’s U.S. crude oil supply from the U.S. Energy Information Administration, which showed a build of 515,000 barrels. Forecasts prepared by Investing.com predicted a 938,000-barrel draw, while a 4.553-million-barrel draw was recorded during the previous week.

Crude oil supply from the American Petroleum Institute released the day before, showed a build of 1.404 million barrels.

Global shares were also on a downward trend, with Asian shares down on Friday. Crude markets were also impacted, with investors increasingly expecting that central banks will hike interest rates in 2022 to curb high inflation.

"Slumping stock markets amid concerns that the U.S. Federal Reserve may aggressively move to raise rates this year also weighed on sentiment," Sunward Trading chief analyst Chiyoki Chen told Reuters.

Supply concerns were in focus over the past week, after Yemen's Houthi group attacked the United Arab Emirates, OPEC's third-largest producer. U.S.-Russia tensions are also up as Russia, the world's second-largest oil producer builds up a large troop presence near Ukraine's border and stokes fears of armed conflict.

But the International Energy Agency said on Wednesday that oil supply will soon overtake demand as some producers prepare to pump at or above all-time highs. Fuel demand is also holding up despite the spread of the omicron COVID-19 variant.