On Friday, oil prices plunged after rising to seven-year highs this week, as an increase in U.S. crude and fuel stockpiles prompted investors to take profits from the rally.
By 0136 GMT, the price of crude fell $2.46, or 2.8%, to $85.92 a barrel. The contract fell by 3%, the most since Dec. 20. The global benchmark was at $89.50 a barrel on Thursday, its highest since October 2014 when it reached $89.50 a barrel.
U.S. West Texas Intermediate WTI crude futures fell $2.61, or 3.1%, to $82.94 a barrel. The contract fell by as much as 3.2%, the most since Dec. 20, after it rose to its highest since October 2014 on Wednesday.
The recent rally in crude prices appeared to be running out of steam on Thursday when Brent and WTI ended the trading session with little losses. Both benchmarks have gained more than 10% this year because of concerns about tight supply.
After an increase in U.S. inventory and ahead of the weekend, investors made short-term adjustments in their positions, said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
The U.S.'s largest oil consumer, gasoline inventories, rose by 5.9 million barrels, to their highest since February 2021, according to the U.S. Energy Information Administration EIA Crude stockpiles, which increased by 515,000 barrels last week, against industry expectations.
The EIA reported a decline in refinery runs, indicating lower demand for crude.
The falling equity markets have affected crude markets as investors worry about central banks raising interest rates this year in order to combat inflation, with the Nasdaq dropping 1.3% in the U.S. and the Nikkei 225 index down 1.7% in Japan.
Slumping stock markets amid concerns that the Federal Reserve may aggressively move to raise rates this year also weighed on sentiment, said Chiyoki Chen, chief analyst at Sunward Trading.
Oil supply concerns increased this week after Yemen's Houthi group attacked the United Arab Emirates, OPEC's third largest producer of oil, while Russia, the world's second largest oil producer, built up a large troop presence near Ukraine's border, stoking fears of an invasion.
However, the International Energy Agency IEA said on Wednesday that oil supply will soon surpass demand as some producers are set to pump at or above all-time highs while demand remains high despite the spread of the Omicron coronavirus variant.