Oil prices dropped in early Asian trading on Wednesday after a brief recovery in the previous session, following industrial data showing an unexpected increase in US crude oil and gasoline inventories, which offset concerns about global oil supply. Brent crude oil futures fell by 21 cents, or 0.27%, to $76.27 per barrel as of 0020 GMT. Meanwhile, US West Texas Intermediate crude dropped by 25 cents, or 0.34%, to $72.95 per barrel.
According to market sources citing data from the American Petroleum Institute on Tuesday, crude oil, gasoline, and distillate inventories in the US rose last week. The API numbers indicated that crude oil inventories increased by 176,000 barrels in the week ending on August 2, contrary to analysts‘ expectations of a 700,000-barrel decrease. Gasoline inventories surged by 3.313 million barrels, while distillate inventories rose by 1.217 million barrels, exceeding expectations.
The US Energy Information Administration is set to release the weekly inventory data on Wednesday at 10:30 am (1430 GMT). On Monday, Brent futures hit their lowest level since early January, and WTI futures reached their lowest point since February amid growing concerns about a possible recession in the US, the world’s largest oil consumer. However, both benchmarks experienced a turnaround on Tuesday, fueled by escalating tensions in the Middle East, which heightened supply concerns and supported prices.
The threat of retaliation from Iran against Israel and the US following the killing of two militant leaders has raised fears of a brewing conflict in the Middle East. ANZ analyst Daniel Hynes noted that any escalation in the Middle East conflict could increase the risk of supply disruptions from the region. Furthermore, the reduced production from Libya’s Sharara oil field, with a capacity of 300,000 barrels per day, also adds to concerns about supply shortages.
According to the US Energy Information Administration’s estimates released on Tuesday, global oil inventories have declined by approximately 400,000 barrels per day in the first half of this year. The EIA anticipates a further decrease of around 800,000 barrels per day in the second half of the year due to various factors influencing the oil market.
The fluctuation in oil prices reflects the delicate balance between supply and demand, influenced by geopolitical tensions, economic conditions, and production levels. As investors and analysts closely monitor inventory data and geopolitical developments, the oil market remains susceptible to sudden shifts in prices. Stay tuned for the latest updates on oil prices and market trends.