Oil prices fell on Wednesday after a sharp increase in United States crude inventories outweighed concerns over disruptions to Saudi Arabian supplies and the wider Middle East market.
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 dropped $1.64, or 1.55 per cent, to $104.19 a barrel.
The decline came a day after both benchmarks gained more than $3 to reach their highest levels since May 19, driven by the suspension of oil loadings at Saudi Arabia’s Yanbu port and reduced shipments to Europe.
Market sources said data from the American Petroleum Institute showed US crude, gasoline and distillate inventories all increased last week.
US crude stocks rose by 7.1 million barrels in the week ended September 11, sharply exceeding analysts’ expectations for a decline of about 1.6 million barrels, according to a Reuters poll.
The unexpected inventory build added pressure to oil prices by suggesting greater availability in the US market. Haitong Futures said the rise in regional inventories had weighed on prices, although it did not alter what it described as tight conditions in the global crude market.
Despite the inventory increase, supply concerns linked to the Middle East continued to support prices. Saudi Arabia has suspended oil loadings at Yanbu after shutting its East-West pipeline following an attack that Riyadh attributed to Iraqi militants.
The pipeline is a key route for transporting Saudi crude from the Gulf to the Red Sea, allowing exports to bypass the Strait of Hormuz. The disruption has forced Saudi Arabia to explore alternative export routes, including additional crude shipments through Oman.
Priyanka Sachdeva, head of market insights at Phillip Nova, said traders remained focused on disruptions to physical supplies despite the pressure from rising inventories.
“The bigger concern remains the disruption to Saudi Arabia’s East-West pipeline and Yanbu export infrastructure,” she said, pointing to the impact of attacks on Saudi energy facilities.
European diesel futures also reached a record high on Tuesday, underscoring tightness in refined fuel markets as disruptions in the Middle East constrained crude and petroleum-product flows.
The competing forces of rising US inventories and continuing supply risks have left oil markets highly sensitive to developments in the Middle East, with both Brent and WTI remaining above $100 a barrel.
