Oil falls as US inventories rise, traders watch Middle East crisis

Oil prices fell more than 1% on Wednesday as traders looked for signs of easing tensions in the Middle East and new data showed U.S. inventories rising sharply.

West Texas Intermediate (CL=F) fell to around $71 a barrel, while Brent (BZ=F), the international benchmark price, was around $75.

The latest government data showed crude oil inventories rose by 5.5 million barrels last week, while analysts had expected a rise of 1 million barrels, according to Bloomberg data.

Gasoline inventories rose by 900,000 barrels from the previous week, while a decline of 1.9 million barrels was forecast.

Data from the American Petroleum Institute (API), an industry group, also showed a larger-than-expected increase in inventories.

The fall in oil prices came after a 4% rise in the previous two sessions as traders monitored the crisis in the Middle East with escalating conflicts in Gaza and Lebanon. On Tuesday, US Secretary of State Antony Blinken arrived in Israel to meet with Prime Minister Benjamin Netanyahu and restart talks on a ceasefire.

The lack of recent headlines about Israel’s retaliation plans against Iran following an October 1 rocket attack also weighed on prices.

“Crude oil futures are under pressure as no news from Israel is seen as negative news for oil prices, potentially postponing a counterattack until after the U.S. election,” Dennis Kissler, senior vice president at BOK Financial, said on Wednesday.

A rising US dollar index also has a negative impact on oil prices because the raw material is invoiced in US currency.

Brent hit $80 a barrel earlier this month on speculation that Israel would attack Iran’s oil infrastructure, a concern that has recently eased.

“As concerns over Iranian oil supplies have eased, the market’s focus is shifting back to the risks of oversupply in 2025,” Goldman Sachs analysts said in a note on Tuesday.

The company forecasts Brent to trade in the range of $70 to $85 per barrel, with an average price of $77 in the fourth quarter of 2024 and $76 next year.

The Organization of the Petroleum Exporting Countries and its allies are expected to begin reversing production cuts in December, a step the oil alliance had previously postponed.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her to X at @ines_ferre.

Click here for a detailed analysis of the latest stock market news and events affecting stock prices

Read the latest financial and business news from Yahoo Finance