Oil prices dropped on Wednesday as a report revealed an increase in U.S. crude inventories, coupled with ongoing concerns over tariffs that have dampened market sentiment. The decline reversed three consecutive days of price gains fueled by escalating tensions in the Middle East and tighter sanctions.
Brent crude futures fell by 36 cents, or 0.47%, to $76.64 per barrel by 0130 GMT. U.S. West Texas Intermediate (WTI) crude also experienced a 37-cent drop, or 0.5%, settling at $72.95 per barrel.
The decrease in prices marked the end of a three-day price surge, with Brent rising 3.6% and WTI gaining 3.7% over that period.
According to sources referencing American Petroleum Institute (API) data, U.S. crude stockpiles increased by 9.4 million barrels during the week ending February 7. Gasoline inventories dropped by 2.51 million barrels, while distillate stocks saw a reduction of 590,000 barrels.
A Reuters survey on Tuesday indicated expectations that U.S. crude and gasoline inventories had risen, while distillate stocks were likely to have decreased. The Energy Information Administration (EIA) is set to release its own data later on Wednesday.
The EIA raised its projection for U.S. crude production, now forecasting an average output of 13.59 million barrels per day in 2025, up from the previous estimate of 13.55 million bpd, while its demand outlook remains unchanged.
Market sentiment was also weighed down by concerns that ongoing U.S. tariff measures, as well as threats of additional tariffs, could stifle global economic growth and reduce energy demand.
However, fears surrounding potential disruptions to oil supply helped cap the losses. Warnings from Israeli Prime Minister Benjamin Netanyahu and U.S. President Donald Trump regarding the potential end of the Gaza ceasefire if Hamas did not release Israeli hostages heightened concerns of renewed violence that could destabilize the Middle East, a crucial oil-producing region.
The ongoing geopolitical tensions contributed to a more than 1% surge in oil prices on Tuesday, bolstered by the U.S. sanctions targeting Russian oil exports to China and India, alongside President Trump’s “maximum pressure” campaign on Iranian oil.
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