Oil prices fell on Wednesday as new data from the United States government revealed a larger-than-expected increase in crude oil and fuel inventories. The report showed a 5.8 million barrel rise in US crude stocks for the week ending April 5, more than double what analysts had predicted. This surge in inventories was attributed to weak demand and reduced oil exports.
Following the news, Brent crude futures dropped by 28 cents, or 0.3 percent, to $89.14 per barrel, while US West Texas Intermediate (WTI) crude futures fell by 35 cents, or 0.4 percent, to $84.88. Both Brent and WTI had experienced a drop of more than one percent in the previous session. On the domestic front, crude oil futures on the Multi Commodity Exchange (MCX) were last seen trading 0.18 percent higher at $7,115 per barrel.
The US Energy Information Administration (EIA) data also showed unexpected increases in refined products inventories, with gasoline stocks up by 700,000 barrels and distillate stocks by 1.7 million barrels. Additionally, there was a notable drop in oil product supplied, a key indicator of fuel demand, and crude oil exports, both experiencing decreases of 2.1 million barrels per day (bpd) and 2.7 million bpd, respectively.
In light of the rising inventories and subdued demand, the US EIA raised its forecast for crude oil output. It now expects a 280,000 bpd increase to 13.21 million bpd in 2024, a significant adjustment from its previous forecast of a 20,000 bpd rise in output. These developments come amidst concerns about a potential conflict in the Middle East, particularly with Iran threatening to close the Strait of Hormuz, a crucial waterway for global oil shipments.
