Oil prices fell on Wednesday due to rising U.S. crude inventories and a potential easing of Middle East tensions following a recent diplomatic tour.
By 06:30 GMT, Brent crude futures had decreased by 11 cents, or 0.1%, settling at $77.09 per barrel. Similarly, U.S. West Texas Intermediate (WTI) crude dropped by 14 cents, or 0.2%, to $73.03 per barrel.
According to American Petroleum Institute (API) figures released on Tuesday, U.S. crude oil inventories increased by 347,000 barrels last week. However, gasoline and distillate stocks experienced declines, falling by 1.043 million barrels and 2.247 million barrels respectively.
As the largest global oil producer and consumer, rising U.S. inventories suggest an oversupply scenario, which could exert downward pressure on prices. Official inventory data from the U.S. government is expected later today at 10:30 a.m.
In the Middle East, U.S. Secretary of State Antony Blinken has concluded a visit aimed at facilitating a ceasefire agreement in Gaza. Blinken’s trip, which included discussions with mediators from Egypt and Qatar, has raised hopes for a potential U.S. “bridging proposal” to address the ongoing conflict between Israel and Hamas.
ING commodities strategists noted that “hopes of a cease-fire between Israel and Hamas have influenced oil prices, alongside persistent concerns about global demand.” They highlighted that weak refinery margins worldwide throughout August indicate that demand issues are not confined to China alone.
China’s economic challenges have continued to impact the oil market, with low processing margins and reduced fuel demand affecting both state-run and independent refineries. Additionally, July data showed a 7.4% decrease in crude oil imports from Russia compared to the previous year, while fuel oil imports declined for the third consecutive month, according to customs data.
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