Key facts
- Oil prices fell on Wednesday, reversing a two-day rally.
- U.S. crude inventories rose by 7.1 million barrels in the week ended September 11, according to API data.
- Brent crude futures fell 0.67% to $107.53 a barrel.
- U.S. West Texas Intermediate futures were down 1.55% at $104.19 a barrel.
- Concerns over Middle East supply disruptions eased as Saudi Arabia offered more loadings via Oman.
- European diesel futures rose to a record high on Tuesday.
Oil prices fell on Wednesday, retreating from a two-day rally as larger-than-expected increases in U.S. crude inventories overshadowed concerns about supply disruptions in the Middle East. Brent crude futures declined 0.67% to $107.53 a barrel, and U.S. West Texas Intermediate futures dropped 1.55% to $104.19 a barrel.
Data from the American Petroleum Institute indicated that U.S. crude oil, gasoline, and distillate inventories all increased last week. Crude inventories saw a build of 7.1 million barrels for the week ended September 11, contrary to analysts' expectations of a 1.6 million barrel draw. Haitong Futures noted that while these inventory increases weighed on prices, they do not alter the fundamental tightness in the global crude market.
Despite the inventory pressure, traders remained focused on physical supply disruptions. Priyanka Sachdeva, head of market insights at Phillip Nova, highlighted concerns over the disruption to Saudi Arabia's East-West pipeline and Yanbu export infrastructure following attacks on energy facilities. European diesel futures reached a record high on Tuesday, underscoring the tightness in fuel markets due to constrained crude and product flows from the Middle East.
However, reports that Saudi Arabia is offering additional crude cargoes to Asian refiners via ship-to-ship transfers off Oman's Sohar port eased some concerns about the scale of Middle East disruptions. UBS analyst Giovanni Staunovo suggested that this news indicates a lessening of fears regarding the extent of the disruption. Preliminary shipping data showed a decrease in vessel transits through the Strait of Hormuz, a key global oil and LNG supply route, amid escalating regional hostilities.