Oil prices slipped on Wednesday as reports indicated increasing US crude inventories and signs of easing tensions in the Middle East following diplomatic efforts in the region. Brent crude futures saw a slight decline, dropping by 11 cents, or 0.1%, to $77.09 per barrel by 0630 GMT. Similarly, US West Texas Intermediate crude fell by 14 cents, or 0.2%, to $73.03 per barrel.
Market sources, citing data from the American Petroleum Institute (API), reported a rise in US crude oil stocks by 347,000 barrels last week. Conversely, gasoline and distillate stocks experienced declines of 1.043 million barrels and 2.247 million barrels, respectively. The growing crude inventories in the United States, the world’s largest oil producer and consumer, suggest an oversupply that could continue to exert downward pressure on prices. Official US government inventory data is scheduled for release later on Wednesday at 10:30 a.m.
The easing of geopolitical tensions also contributed to the drop in oil prices. US Secretary of State Antony Blinken concluded a diplomatic tour of the Middle East, aimed at facilitating a ceasefire agreement in Gaza. Efforts by Blinken, along with mediators from Egypt and Qatar, have raised hopes for a US “bridging proposal” that could narrow the differences between the conflicting parties in the ongoing 10-month war.
ING commodities strategists noted that “hopes of a ceasefire between Israel and Hamas have weighed on oil, along with lingering demand concerns.” They also highlighted that demand concerns are not limited to China, as refinery margins around the world have been under pressure throughout August.
The market has been further impacted by ongoing economic challenges in China, the world’s top crude importer. Weakened processing margins and low fuel demand have led to reduced operations at both state-run and independent refineries. Additionally, China’s imports of crude oil from its largest supplier, Russia, fell by 7.4% in July compared to the previous year, while fuel oil imports declined for the third consecutive month, according to recent customs data.
