Oil prices fall as gasoline stockpiles signal sluggish demand

Oil prices slid on Thursday after US gasoline and distillate fuel stockpiles pointed to lower demand, overshadowing supply concerns from Libyan oil field disruptions.

West Texas Intermediate (CL=F) sank more than 2% before paring losses following the release of US crude inventory data. Brent (BZ=F) also sank into negative territory, losing its opening gains.

Gasoline stockpiles rose by 10.9 million barrels, their highest week-over-week increase in more than three decades, according to the Energy Information Administration.

Distillate inventories, which includes mostly diesel fuel, rose by 10.1 million barrels versus estimates for a build of 400,000 barrels.

Crude inventories fell by 5.5 million barrels for the week ending Dec. 29, but those figures may reflect supplies from the US making up for crude shipment interruptions stemming from Red Sea tensions.

Oil had gained more than 1% earlier on Thursday amid another oil field shut down in Libya. On Wednesday WTI and Brent rose more than 3% after protests shut down the country's major crude production site, the Sharara.

The disruptions come amid escalated tensions in the Red Sea, where vessels have paused or diverted course following a series of Houthi rebel attacks stemming from the Israel-Hamas war.

"Any supply disruption in the Red Sea area could catapult prices to near $80.00 for WTI. Otherwise, equilibrium seems near the $70.00 area," Dennis Kissler, senior vice president at BOK Financial, said on Thursday.

"Seasonally crude prices normally move lower into mid-January," he added.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.

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