Oil prices fell on Wednesday, September 16, after a two-day rally, pressured by an unexpectedly large increase in U.S. crude inventories, although lingering disruptions to Middle Eastern supplies continued to underpin the market.
Brent crude futures fell 73 cents, or 0.67%, to $108.02 a barrel by 0450 GMT, while U.S. West Texas Intermediate futures declined $1.10, or 1.04%, to $104.73, according to Reuters data.
Both benchmarks settled more than $3 higher on Tuesday, reaching their highest levels since May 19, as the suspension of oil loadings at Saudi Arabia’s Yanbu port heightened supply concerns and Saudi Arabia reduced crude shipments to Europe.
U.S. crude, gasoline and distillate inventories all increased last week, according to market sources citing data from the American Petroleum Institute (API). Crude stocks rose by 7.1 million barrels in the week ended Sept. 11, compared with analysts’ expectations for a draw of about 1.6 million barrels, according to a Reuters poll.
The unexpected increases in gasoline and diesel inventories also weighed on prices. However, Haitong Futures said in a note that regional stock builds did not alter the underlying tightness in the global crude market.
“Despite the inventory pressure, prices remained resilient as traders focused on disruptions to physical supplies,” Priyanka Sachdeva, head of market insights at Phillip Nova, said in a report on Wednesday.
“The bigger concern remains the disruption to Saudi Arabia's East-West pipeline and Yanbu export infrastructure, following attacks on Saudi energy facilities,” she said.
The pressure on fuel supplies was also reflected in European diesel futures, which rose to a record high on Tuesday as disruptions in the Middle East constrained flows of crude and refined products.
Oil loadings at Yanbu were suspended after Saudi Arabia shut its East-West pipeline following an attack by Yemen’s Iran-aligned Houthis on Friday, sources said on Tuesday. The pipeline transports crude from Saudi Arabia’s eastern fields to the Red Sea coast.
Saudi Arabia is now offering additional crude loadings to Asian refiners through ship-to-ship transfers off Oman’s Sohar port, people familiar with the matter said on Wednesday, after drone attacks damaged the key pipeline system serving the Red Sea.
Shipping activity through the Strait of Hormuz also remained severely constrained. Visible vessel transits through the waterway stood at four on Tuesday, down from seven a day earlier and well below the 10-day average of 18, preliminary shipping data showed on Wednesday.
The decline comes as attacks across the region have intensified. Before the U.S.-Israeli war on Iran began, the Strait of Hormuz handled about a fifth of the world’s oil and liquefied natural gas supplies.
The combination of unexpectedly high U.S. inventories and persistent Middle Eastern supply disruptions has left oil markets balancing domestic stock pressures against continued risks to physical crude and fuel flows.
By Tamilla Hasanova
