International oil prices fell sharply, the increase in US inventories brought bearishness, and the bulls still have two pillars

International oil prices fell on Friday (Jan. 21), further away from the new seven-year high set overnight, as investors took profits after data showed an increase in U.S. crude and fuel inventories, though overall confidence remained solid amid concerns about tight supply and geopolitical risks.

At 15:12 Beijing time, NYMEX crude oil futures fell 1.65% to $84.14 / barrel; ICE Brent crude oil futures fell 1.48% to $87.07 / barrel.

Overnight, the two markets hit a new high of $87.10/b since October 9, 2014 and a new high of $89.50/b since Oct. 13, 2014, respectively, but after data showing an increase in U.S. inventories, investors adjusted their positions, and the two markets eventually closed lower. But so far this year, both contract prices have risen more than 10 percent.

Gasoline inventories in the United States, the world's largest oil consumer, increased by 5.873 million barrels, far more than expected, 2.6 million barrels more than expected, and the highest level since February 2021, according to the U.S. Energy Information Administration (EIA). Crude oil inventories unexpectedly increased by 515,000 barrels, and are expected to decrease by 1.75 million barrels. The EIA also reported a 0.3 percentage point decline in refining utilization.

Tatsufumi Okoshi, senior economic analyst at Nomura Securities, said the unexpected increase in U.S. crude inventories has prompted investors to take profits, and the recent rally has gone too far. "The decline is limited, though, as tight supply is expected to continue amid a recovery in demand, and geopolitical tensions between Russia and Ukraine and the Middle East have made investors wary of selling."

The stock market downturn has also affected market sentiment. Investors are increasingly worried that the Fed may aggressively raise interest rates this year to fight inflation, and U.S. stocks weakened further overnight, with the Nasdaq falling 1.3 percent to a new low of 14,140.78 points since June 22, 2021.

Oil supply concerns have intensified this week following Yemen's Houthi attack on the United Arab Emirates, OPEC's third-largest oil producer, while Russia, the world's second-largest oil producer, has deployed a huge garrison near the Ukrainian border, stoking fears of an invasion.

However, the International Energy Agency (IEA) said on Wednesday that oil supply will soon exceed demand as some oil-producing countries will reach or exceed record highs while demand remains unchanged, even as the Omiljung coronavirus variant is spreading.

Data from industry sources showed that India, the world's third-largest oil importer, rebounded 3.9 percent in crude oil imports to 4.2 million bpd in 2021, but remained below pre-pandemic levels in 2019. But India's share of imports from the Organization of the Petroleum Exporting Countries (OPEC) fell from a peak of 87 percent in 2008 to 70 percent in 2021, while oil imports from the United States and Canada accounted for 7.3 percent and 2.7 percent of India's total oil imports, respectively, hitting record highs.

This article originated from the financial world