Oil prices declined on Wednesday after industry data revealed that U.S. crude inventories increased more than anticipated. Despite this, crude futures are still up about 3% this week as traders account for ongoing conflict in the Middle East.
Brent crude futures fell 73 cents, or 1%, to $75.31 a barrel by 0917 GMT, while U.S. West Texas Intermediate crude futures dropped 74 cents, also 1%, to $71.00 a barrel.
Oil prices had risen in the previous two sessions, recovering from last week’s losses of over 7%, which were driven by concerns about Chinese demand and easing worries about potential disruptions to Middle East oil supply.
The price drop on Wednesday followed reports that U.S. crude stocks rose by 1.64 million barrels last week, according to sources citing American Petroleum Institute data. Analysts surveyed by Reuters had anticipated an increase of only 300,000 barrels.
Official U.S. government oil inventory data is expected to be released on Wednesday at 10:30 a.m. EDT (1430 GMT).
However, the impact of rising inventories on prices was balanced by persistent concerns regarding potential risks to oil supply due to the Middle East conflict.
“The market is still waiting for Israel’s response to Iran’s missile attack,” ING analysts noted, adding that the price increase on Tuesday may have been influenced by the lack of results from U.S. Secretary of State Antony Blinken’s recent visit to Israel.
Blinken engaged in “extended conversations” with Israeli Prime Minister Benjamin Netanyahu and other senior Israeli officials, emphasizing the need to ensure more humanitarian aid reaches Gaza, according to a senior State Department official.
On Tuesday, Israel confirmed that it had killed Hashem Safieddine, the designated successor to the late Hezbollah leader Hassan Nasrallah, who died last month in an Israeli attack aimed at the Iran-backed Lebanese militant group.
“Market participants are anticipating that the Middle East conflict will continue for an extended period, with a potential ceasefire deal facing some obstacles,” said IG market strategist Yeap Jun Rong.
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