Oil prices experienced a slight decline in early Asian trading on Wednesday, continuing to react to recent market dynamics. This followed a brief rebound in the previous session, driven by industry data revealing an unexpected increase in U.S. crude oil and gasoline inventories, which countered concerns about global oil supply constraints.
Brent crude futures dropped by 21 cents, or 0.27%, to $76.27 a barrel as of 0020 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude decreased by 25 cents, or 0.34%, to $72.95 per barrel. The dip in prices came after benchmarks showed gains the previous day, rebounding from multi-month lows.
The American Petroleum Institute (API) reported on Tuesday that U.S. crude oil, gasoline, and distillate inventories had all risen in the past week. Specifically, crude stocks increased by 176,000 barrels for the week ending August 2, contrary to analysts’ expectations of a 700,000 barrel decrease. Gasoline inventories surged by 3.313 million barrels, against predictions of a 1 million barrel draw, while distillate stocks grew by 1.217 million barrels, exceeding anticipated levels.
The U.S. Energy Information Administration (EIA) is scheduled to release its weekly inventory data at 10:30 a.m. (1430 GMT) on Wednesday, which will provide further insight into the market.
Earlier this week, Brent futures fell to their lowest since early January, and WTI futures touched their lowest point since February, as fears of a potential U.S. recession, the world’s largest petroleum consumer, deepened amidst a global stock market rout. However, both benchmarks managed to break a three-session losing streak on Tuesday. This turnaround was partly fueled by rising geopolitical tensions in the Middle East, which reignited supply concerns and supported prices.
Recent developments have included Iran’s threat of retaliation against Israel and the U.S. following the assassination of two militant leaders, which has escalated fears of a broader conflict in the region. ANZ analyst Daniel Hynes noted that any escalation in Middle East tensions could significantly disrupt oil supplies from the area.
Additionally, reduced production at Libya’s Sharara oilfield, which typically produces around 300,000 barrels per day, has added to the apprehension about supply shortages. The EIA reported a global oil inventory decrease of approximately 400,000 barrels per day in the first half of this year and projected a further decline of around 800,000 barrels per day in the second half.
These factors collectively highlight the current volatility in the oil market, driven by a mix of inventory data, geopolitical tensions, and production fluctuations, which continue to shape price movements and market sentiment.