Oil Prices Decline Amid Rising U.S. Crude Inventories and Easing Middle East Tensions

Oil prices edged lower on Wednesday, influenced by growing U.S. crude inventories and indications that tensions in the Middle East may be easing after a diplomatic tour of the region by key mediators.

Brent crude futures dipped by 11 cents, or 0.1%, to $77.09 a barrel by 0630 GMT, while U.S. West Texas Intermediate (WTI) crude slipped by 14 cents, or 0.2%, to $73.03 a barrel.

The decline in prices follows market reports citing data from the American Petroleum Institute (API), which indicated a rise in U.S. crude oil stocks by 347,000 barrels last week. In contrast, gasoline and distillate stocks decreased by 1.043 million barrels and 2.247 million barrels, respectively. The increase in crude inventories, coupled with the U.S. being the world’s largest producer and consumer of oil, signals potential oversupply, which could put downward pressure on prices.

Traders are now awaiting official U.S. government inventory estimates, scheduled for release on Wednesday at 10:30 a.m. ET, to confirm the API’s findings.

In the geopolitical sphere, U.S. Secretary of State Antony Blinken concluded a diplomatic mission to the Middle East aimed at facilitating a ceasefire agreement in Gaza. His efforts, alongside mediators from Egypt and Qatar, have raised hopes for a U.S.-proposed “bridging proposal” that could help narrow the differences between the conflicting parties in the ongoing 10-month war.

Meanwhile, economic challenges in China, the world’s largest crude importer, continue to weigh on the market. Weak processing margins and subdued fuel demand have led to reduced operations at both state-run and independent refineries. Customs data from July revealed a 7.4% year-over-year decline in crude oil imports from Russia, China’s top supplier, alongside a third consecutive month of declining fuel oil imports.

These factors combined—rising U.S. crude stocks, easing Middle East tensions, and continued economic struggles in China—are contributing to the current downward pressure on oil prices.