Oil Prices Fall as US Crude Stocks Rise, Middle East Disruptions Support Prices

Post by : Saif

Oil prices fell on Wednesday after data showed a much larger-than-expected increase in US crude inventories. Brent and US West Texas Intermediate (WTI) both moved lower after gaining strongly during the previous two sessions.

Brent crude futures dropped 73 cents, or 0.67%, to $108.02 a barrel, while WTI fell $1.10, or 1.04%, to $104.73 a barrel at 0450 GMT.

Both benchmarks had settled more than $3 higher on Tuesday, reaching their strongest levels since May 19. Concerns over disrupted Saudi oil exports and wider supply risks in the Middle East had pushed prices higher.

US Crude Inventories Rise Sharply

US crude inventories increased by about 7.1 million barrels in the week ended September 11, according to data from the American Petroleum Institute cited by market sources.

The increase was far above expectations. A Reuters poll of analysts had pointed to a decline of around 1.6 million barrels.

US gasoline and distillate inventories also increased during the week. The unexpected stock builds added pressure to oil prices by raising concerns about demand and near-term market conditions.

Analysts noted that higher US inventories do not necessarily remove the broader supply concerns affecting global crude markets.

Saudi Oil Supply Disruptions Remain a Key Concern

Supply disruptions in Saudi Arabia continue to support oil prices despite the pressure from rising US inventories.

Oil loadings at Saudi Arabia's Yanbu port were suspended after the country shut its East-West pipeline following an attack on energy infrastructure. The pipeline is an important route for transporting Saudi crude toward the Red Sea.

Saudi Arabia has also been offering additional crude cargoes to Asian refiners through ship-to-ship transfers near Oman's Sohar port, according to people familiar with the situation.

These alternative arrangements could help maintain supplies to some buyers, but disruptions to major infrastructure have increased concerns about how much crude can move through normal export routes.

Strait of Hormuz Traffic Remains Low

Shipping activity through the Strait of Hormuz is another major factor affecting the oil market.

Preliminary shipping data showed only four visible vessel transits through the waterway on Tuesday, down from seven a day earlier. The figure was also well below the 10-day average of 18 crossings.

Before the conflict involving the United States, Israel and Iran began, the Strait of Hormuz carried around one-fifth of global oil and liquefied natural gas supplies.

Lower vessel traffic through the waterway has increased uncertainty for crude and fuel markets, particularly as attacks and other disruptions in the Middle East continue.

Read more: Oil Prices Ease Amid Reports of Possible US-Iran Ceasefire

European Diesel Prices Hit Record

Fuel markets are also showing signs of supply pressure. European diesel futures reached a record high on Tuesday as disruptions in the Middle East affected crude and refined-product flows.

Market participants are therefore watching both US inventory data and developments around Saudi infrastructure and the Strait of Hormuz.

Oil prices remain caught between two opposing forces: rising US inventories are putting downward pressure on crude, while disruptions to physical supplies in the Middle East are keeping concerns about global availability elevated.

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