Crude oil prices fell Thursday after a surprise build in U.S. inventories and ongoing uncertainty in the Middle East rattled market sentiment.
Brent crude was trading at $64.82 per barrel, while West Texas Intermediate (WTI) stood at $61.50. Both benchmarks were down from Wednesday’s close, erasing earlier gains from the week.
The decline followed a new report from the U.S. Energy Information Administration (EIA), which showed a rise in oil and fuel inventories. Crude stocks grew by 1.3 million barrels last week, while gasoline and middle distillates rose by 800,000 and 600,000 barrels, respectively. The data surprised many traders and contributed to the drop in prices.
“While rising U.S. inventories have raised concerns, some investors expect the summer driving season starting after Memorial Day weekend to draw down stocks, limiting further downside,” said Hiroyuki Kikukawa, analyst at Nissan Securities, speaking to Reuters.
Bloomberg also reported that hopes for a resolution to the war in Ukraine and fading prospects of a U.S.-Iran nuclear deal added to the bearish tone. However, neither development is likely to materialize in the short term.
Earlier this week, oil prices climbed after CNN reported that Israel was planning direct strikes on Iranian nuclear sites. The information came from unnamed U.S. intelligence and government officials, one of whom said the likelihood of such strikes “has gone up significantly in recent months.” The report pushed prices up by 1% on Monday.
The next round of nuclear talks between the U.S. and Iran is set to begin tomorrow in Rome. But analysts say that major disagreements remain, and a breakthrough is unlikely in the near future.
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