Oil prices down after US stockpile build signals weak demand

By Duygu Alhan

Oil prices fell on Wednesday following data indicating an increase in crude inventories in the US, the world's biggest oil consumer.

International benchmark Brent crude traded at $82.64 per barrel at 09.31 a.m. local time (0631 GMT), a decrease of 0.62% from the closing price of $83.16 per barrel in the previous trading session.

American benchmark West Texas Intermediate (WTI) traded at $77.88 per barrel at the same time, a 0.64% fall from the previous session that closed at $78.38 per barrel.

Oil prices were buoyed by data released by the American Petroleum Institute (API) late on Tuesday showing an increase of 509,000 barrels in US crude oil inventories, against the market expectation of a draw of 1.4 million barrels.

The rise in commercial crude oil reserves reflected market perceptions of weakening domestic demand to drive prices down.

Further price reductions are likely if US Energy Information Administration (EIA) data later on Wednesday shows an inventory drawdown against estimates of a stock rise.

Meanwhile, the increasing value of the US dollar against other currencies, which rose by 0.12% to 105.54, curtailed the fall in prices by making oil expensive for other currency-holding traders.

However, the escalating geopolitical tensions on the Palestinian side of the Rafah border crossing due to the Israeli attacks continue to influence oil prices.

Yemen’s Houthi group threatened Tuesday to expand its attacks on shipping if the Israeli army invaded the city of Rafah in the southern Gaza Strip.

"The Israeli escalation in the Gaza Strip and the West Bank and their threat to invade Rafah will be met with a Yemeni response and the launching of the fourth round of escalation," Allama Muhammad Muftah, the chairman of the Houthi-run Supreme Committee for Supporting Al-Aqsa, told the Al-Masirah TV channel.

These developments are raising market fears that the conflict in the Middle East, the main oil-producing region, could intensify and put upward pressure on prices.