Oil slips as growing stockpiles cushion threat from Russia ban

Oil edged lower as U.S. stockpiles increased, signaling that supplies may be sufficient to weather the EU’s latest ban on Russian products, while the Federal Reserve’s interest rate decision loomed over broader markets.

West Texas Intermediate slipped close to US$78 a barrel, breaking out of the narrow US$1 range it had traded in for much of the morning, after the Energy Information Administration reported that U.S. inventories rose to the highest level since June 2021.  

Russia has recently “flooded” the market with crude products ahead of an EU ban on its refined products that goes into effect early this month, said Brian Kessens, a portfolio manager at Tortoise, a firm that manages roughly US$8 billion in energy-related assets. 

“Fast forward just a month, Russia bans will be in effect, oil demand will tick up, and what I would expect is we start to see draws from inventories,” Kessens said.