Oil prices fell by almost a dollar a barrel on Wednesday after a surprise rise in crude oil inventories in the largest oil market, the United States, raised concerns about demand.
Global benchmark Brent crude oil futures fell 79 cents, or 1%, to $76.80 a barrel. WTI crude oil futures fell 87 cents, or 1.2%, to $71.37 a barrel.
Prices had risen more than 1% at the start of the session, but the trend reversed after the US Energy Information Administration (EIA) reported larger-than-expected increases in crude oil inventories, gasoline, and distillate storage.
This report highlights investors’ concerns about slowing demand growth.
U.S. crude inventories rose 1.3 million barrels to 432.4 million barrels in the week ending January 5, when analysts expected a 700,000-barrel decline in the surveys. According to EIA’s report, gasoline stocks increased by 8 million barrels, while distillate stocks increased by 6.5 million barrels.
Weaker crude and refined product exports may have led to higher inventories in the US, so that’s something to watch as it expresses the foreign demand.
Europe’s weak economic outlook has increased concerns about oil demand. The eurozone may have been in recession last quarter and expectations remain weak, European Central Bank Vice President Luis de Guindos said on Wednesday.
While limiting some of the losses, investors remained concerned about potential oil supply disruptions in the Middle East during the Israel-Hamas war.
The White House said attacks by Yemen-based Houthi militants in the Red Sea were concerning and that if they continued, the United States would consult with partners on the next steps.