The world's most actively traded commodity surged to nearly US$140 a barrel in March, close to an all-time record, following the launch of what Moscow called a "special operation" in Ukraine.
The market has been steadily declining in the latter months of the year as economists brace for weakened worldwide growth in part due to high energy costs. Wednesday's losses were driven by bigger-than-expected increases in US fuel stocks.
Brent futures fell to US$77.17 a barrel, settling below the year's previous closing low of US$78.98 a barrel touched on the first day of 2022. WTI weakened further from Tuesday's close, which was already a yearly low, to US$72.01 a barrel.
The recent declines have come against what should be a supportive backdrop for prices. China, the world's biggest crude importer, announced the most sweeping changes to its anti-COVID regime since the pandemic began. The country's crude oil imports in November rose 12% from a year earlier to their highest in 10 months.
G7 nations kicked off implementation of a price cap to restrict Russian exports that could cause that nation to reduce output in the coming year.
As against this, US distillate stocks posted a build of 6.2 million barrels, according to the Energy Information Administration, far exceeding estimates for a 2.2 million barrel rise. Gasoline inventories also climbed 5.3 million barrels against expectations for an increase of 2.7 million barrels.
The build in fuel stocks outweighed a 5.2 million barrel draw in crude stocks. The American Petroleum Institute had reported a crude stocks draw of around 6.4 million barrels, according to market sources.
At least 20 oil tankers queuing off Turkey face more delays to cross from Russia's Black Sea ports to the Mediterranean as operators race to adhere to new Turkish insurance rules added ahead of a G7 price cap on Russian oil, sources said on Tuesday.
Russia, the Vedomosti daily reported on Wednesday, is considering options including banning oil sales to some countries to counter the price cap imposed by Western powers.
"There's still tons of uncertainty in the markets today," said Claudio Galimberti, senior vice-president at Rystad Energy, adding crude production in Russia may not drop as much as expected earlier.
Still, warnings from big US banks about a likely recession next year weighed. The net speculative fund long position is now at a six-year low with some prominent funds liquidating in the past few days, said Dennis Kissler, senior vice president of trading at BOK Financial.
