Unexpected surge in US oil inventories leads prices to fall amid Middle East tensions
(MENAFN) Oil prices experienced a decline during early Asian trading on Wednesday, following a brief rebound in the previous session. This shift came after data revealed an unexpected increase in U.S. crude and gasoline inventories, which mitigated concerns about global oil supply shortages. By 0020 GMT, brent crude futures had decreased by 21 cents, or 0.27 percent, settling at USD76.27 per barrel. Similarly, U.S. West Texas Intermediate (WTI) crude fell by 25 cents, or 0.34 percent, to USD72.95 per barrel. Market sources reported that U.S. crude, gasoline, and distillate stockpiles had risen over the past week, based on figures from the American Petroleum Institute (API) disclosed on Tuesday. This increase in inventories caused both Brent and U.S. crude benchmarks to decline, even though they had previously rebounded from multi-month lows in the last session.
The API data indicated that crude inventories increased by 176,000 barrels in the week leading up to August 2, contrary to analysts' expectations of a 700,000-barrel decrease. Additionally, gasoline stocks rose significantly by 3.313 million barrels, whereas analysts had anticipated a 1 million-barrel decline. Distillate stocks also saw a larger-than-expected rise of 1.217 million barrels. These unexpected inventory increases added downward pressure on oil prices. The U.S. Energy Information Administration (EIA) is scheduled to release its weekly inventory data at 1430 GMT on Wednesday, which will provide further insights into U.S. oil stockpiles.
Meanwhile, geopolitical tensions in the Middle East are escalating, with Iran vowing revenge on Israel following the assassinations of Hamas's political chief in Tehran and a senior Hezbollah commander in Beirut. This situation has raised fears of a broader conflict in the region, which could potentially disrupt oil supplies. Analyst Daniel Hynes from ANZ noted that any escalation of the conflict could increase the risk of supply disruptions from the Middle East. Additionally, lower production levels at Libya’s El Sharara oilfield, which produces 300,000 barrels per day, are contributing to supply concerns. According to estimates from the EIA, global oil inventories fell by about 400,000 barrels per day in the first half of the year, and the administration projects a further decrease of approximately 800,000 barrels per day in the second half of the year. These dynamics are influencing market perceptions and oil price movements amidst ongoing supply and geopolitical uncertainties.
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