Oil prices declined on Wednesday as a larger-than-expected increase in United States crude inventories outweighed concerns over disruptions to Saudi Arabia’s oil exports and tightening fuel supplies in the Middle East.
Brent crude futures fell $1.22, or 0.67 per cent, to $107.53 a barrel at 0655 GMT, while US West Texas Intermediate crude declined $1.64, or 1.55 per cent, to $104.19 a barrel.
The losses followed a strong rally on Tuesday, when both benchmarks climbed more than $3 to their highest levels since May 19. The gains were driven largely by the suspension of oil loadings at Saudi Arabia’s Yanbu port and reduced Saudi shipments to Europe.
Data from the American Petroleum Institute showed that US crude, gasoline and distillate inventories all increased in the week ended September 11.
Crude stocks rose by 7.1 million barrels, sharply exceeding analysts’ expectations for a decline of about 1.6 million barrels, according to a Reuters poll.
The unexpected build raised concerns about demand and increased availability in the US market, putting downward pressure on prices. Haitong Futures said the rise in inventories had weighed on the market, although it maintained that global crude supplies remained tight.
However, continuing disruptions to Saudi oil infrastructure provided some support for prices. Riyadh suspended oil loadings at Yanbu after shutting its East-West pipeline following an attack it attributed to militants in Iraq.
The East-West pipeline is an important part of Saudi Arabia’s oil export infrastructure, carrying crude from the Gulf to the Red Sea and allowing the kingdom to bypass the Strait of Hormuz.
With the disruption affecting its normal export routes, Saudi Arabia has been exploring alternatives, including increased crude shipments through Oman.
Priyanka Sachdeva, head of market insights at Phillip Nova, said traders remained focused on physical supply disruptions despite the bearish impact of rising US inventories.
“The bigger concern remains the disruption to Saudi Arabia’s East-West pipeline and Yanbu export infrastructure,” she said, citing attacks on Saudi energy facilities.
Meanwhile, European diesel futures rose to a record high on Tuesday, highlighting mounting tightness in refined fuel markets as disruptions across the Middle East restricted crude and petroleum-product flows.
The latest price movement reflects competing pressures in the global oil market, with rising US inventories weighing on prices while disruptions to Saudi supplies and broader Middle East tensions continue to constrain physical supply.
Despite Wednesday’s decline, both Brent and WTI remained above the $100-a-barrel mark.
