WTI crude oil futures fell below $71 per barrel on Wednesday, snapping a two-day rally, as a larger-than-anticipated increase in U.S. crude inventories weighed on the market.
Oil futures fall amid US higher inventories
The Energy Information Administration (EIA) reported a substantial 5.5 million barrel rise in U.S. crude oil stockpiles, far surpassing analyst forecasts, while gasoline inventories also unexpectedly grew by 900,000 barrels, despite expectations for a decline. However, there was a slight reduction of 346,000 barrels at the Cushing, Oklahoma storage hub, offering some support to prices.
Traders are also keeping a close eye on geopolitical tensions, with the ongoing conflict in the Middle East, as Israel's military operations in Gaza and Lebanon raise concerns over potential disruptions to oil supply routes. Diplomatic efforts to prevent further escalation are being watched closely, as any significant disruption in the region could trigger volatility in global oil markets.
Chinese impact on crude oil
Meanwhile, China's recent stimulus measures aimed at bolstering its economy have helped provide a floor for oil prices, as demand from the world's largest crude importer is a key factor in price stability. However, concerns over long-term demand persist, especially with fears of a potential global surplus amid weakening economic conditions in other major economies, including the U.S. and Europe. Additionally, the prospect of slower growth and possible interest rate hikes by central banks may further weigh on demand, contributing to uncertainty in the oil market's outlook.
