Oil Prices Slip as Unexpected US Crude Stockpile Surge Raises Oversupply Fears

Oil prices dipped on Wednesday as fresh government data revealed an unexpected increase in US crude oil inventories, sparking concerns among investors about an oversupply in the market. Brent crude futures declined by 40 cents, or approximately 0.6%, settling at $66.23 per barrel, while US West Texas Intermediate (WTI) crude fell 39 cents, or 0.61%, to $63.28. Both benchmarks, which had neared two-week highs in the prior session fueled by the US-China 90-day tariff suspension, retreated after the Energy Information Administration (EIA) reported a 3.5 million barrel rise in crude stockpiles to 441.8 million barrels last week, far exceeding analyst expectations.

The EIA data contrasted sharply with forecasts from a Reuters poll, which had anticipated a 1.1 million barrel drawdown, adding to market unease. Net US crude imports surged by 422,000 barrels per day, according to the agency, while preliminary industry data from the American Petroleum Institute (API) on Tuesday had already signaled a substantial 4.3 million barrel build in crude stocks. This unexpected accumulation has pressured prices downward, with analysts noting the API figures as a key factor in Wednesday’s decline. The market’s reaction underscores growing worries about supply-demand imbalances as inventories swell beyond projections.

Contributing to the downward pressure, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) have been ramping up market supply in recent months. However, OPEC adjusted its outlook on Wednesday, lowering its forecast for oil supply growth from non-OPEC+ producers, including the United States, for the year. Despite this revision, experts caution that the persistent addition of barrels could eventually overwhelm demand. “At some point, supply is just going to swamp out demand and drill the market lower,” warned a market strategist, highlighting the risk of a prolonged oversupply that could further depress oil prices in the near term.

As oil markets digest these developments, the interplay between rising stockpiles, OPEC+ supply strategies, and global trade dynamics remains critical. The recent US-China tariff truce, which cut duties to 30% on Chinese imports and 10% on US goods, had briefly lifted prices, but the focus has shifted back to domestic supply concerns. With inventories climbing and demand growth uncertain, oil prices may face additional downward pressure unless significant demand catalysts emerge, making the coming weeks a pivotal period for assessing the market’s direction.