Oil prices fell on Thursday as a sharp build in U.S. crude inventories and weaker global consumption forecasts outweighed continuing concerns over disrupted supply routes. Brent futures declined 91 cents, or 1%, to $88.07 a barrel at 0800 GMT, giving back part of the gains recorded over the previous six sessions. U.S. West Texas Intermediate (WTI) crude dropped 96 cents, or 1.2%, to $82.31 a barrel after climbing for five straight sessions.
U.S. inventory surge weighs on crude
A substantial increase in American crude stocks added fresh downward pressure to the market and helped keep benchmark prices below $90 a barrel.
PVM analyst John Evans pointed to the combination of rising U.S. inventories and reduced demand projections from the Organization of the Petroleum Exporting Countries and the International Energy Agency as key factors limiting crude’s recent rally.
Figures from the Energy Information Administration showed that U.S. commercial crude inventories recorded their largest weekly increase since January 2023 as exports weakened.
Inventories rose by 17.4 million barrels to 424.4 million in the week ended August 7, their highest level since June 5. The build was far larger than expected, with a Reuters survey of analysts having predicted a 1.4 million-barrel decline.
Demand forecasts turn less supportive
Oil also faced pressure from deteriorating expectations for global consumption.
OPEC lowered its estimate for world oil demand growth in 2026 to 580,000 barrels per day in its latest monthly market report.
The IEA delivered an even more cautious assessment, forecasting that consumption will shrink by 1.6 million barrels per day this year. That compares with its previous estimate for a decline of 1 million barrels per day.
The agency said high energy prices and supply restrictions stemming from the U.S.-Israeli war with Iran are reducing consumption.
Hormuz blockade continues to underpin supply concerns
Geopolitical risks nevertheless prevented a sharper decline in crude as uncertainty surrounding the Strait of Hormuz remained unresolved.
A senior Iranian source said on Wednesday that negotiations had failed to make progress towards restoring an interim U.S.-Iranian agreement reached in June or establishing a schedule for putting it into effect.
Shipping flows through the strait also stayed unusually low. Vessel crossings excluding container ships fell to just five on Wednesday, the lowest level in three weeks, according to Kpler data.
With little indication of a breakthrough over the blocked waterway, traders continue to price in the risk of prolonged disruption to Middle Eastern energy exports.
Russia-Ukraine attacks add another supply threat
Concerns over physical supply also extended to the Black Sea region as Russia and Ukraine reported fresh attacks affecting industrial and transport areas.
Russia targeted the Izmail port district in Ukraine’s southern Odesa region overnight, while a separate drone strike sparked a fire in an industrial zone in Salavat, in Russia’s Bashkortostan republic.
Salavat is home to a major oil refinery, adding to concerns that escalating attacks could interfere with refining or logistics infrastructure.
For now, weaker demand expectations and the surge in U.S. crude inventories are dominating price action, but persistent geopolitical disruptions are continuing to provide a floor under the market.
Leave a Reply