Oil prices fell on Wednesday following data indicating an unexpected increase in crude inventories in the US, the world’s biggest oil consumer.
International benchmark Brent crude decreased by 0.57% to $73.28 per barrel at 10.59 a.m. local time (0759 GMT), down from the previous session’s close of $73.70.
US benchmark West Texas Intermediate (WTI) declined 0.61% to $69.53 per barrel after closing at $69.96 in the prior session.
Data released by the American Petroleum Institute (API) late on Tuesday showed an increase of 1.96 million barrels in US commercial crude oil inventories. The build-up in inventory is against market expectation of a drop of 100,000 barrels.
The reserve rise reflected market perceptions of weakening domestic demand, driving prices down.
If official data from the Energy Information Administration (EIA) later on Wednesday reveals a rise in oil stockpiles, prices are predicted to fall further.
Increased demand concerns in China, the world’s largest crude oil importer, also continues to put downward pressure on oil prices.
Chinese economic data released over the weekend pointed to economic weakness in the world’s second biggest oil consumer, reinforcing doubts over oil demand.
However, renewed tensions in the Middle East that may cause possible output disruptions in the key producing region supported oil prices.
On Tuesday, the coordinated explosions of pager devices occurred across multiple locations in Lebanon, with Hezbollah members being the primary targets.
At least nine people including a child were killed in a mass explosion of the pagers in areas across Lebanon, according to Lebanese Health Minister Firas Al-Abiad. He added that around 2,750 people were also injured, including 200 in critical condition.
The Lebanese group Hezbollah held Israel fully responsible for the explosion and reported that two of its members were among the deceased, vowing ‘just retaliation from unexpected quarters’ to Israel following the mass explosions.
Israel has not yet issued a statement on the incident, though tensions along the Israel-Lebanon border have intensified since October 2023, amid ongoing clashes.
Markets are positioned for an interest rate cut from the US Federal Reserve (Fed) following its meeting on Wednesday which would be the first rate cut since 2020.
The bank is likely to start an easing cycle, with analysts predicting a 65% chance of a 50-basis-point reduction. Lower rates could spur economic activity and increase oil demand.
