Crude oil prices eased slightly in Thursday’s session as the global market absorbed fresh data showing a sharp rise in U.S. inventories and production levels, raising concerns over weakening demand in the world’s largest oil consumer.
Brent crude futures slipped 0.1% to $67.41 per barrel at press time, while U.S. West Texas Intermediate (WTI) futures declined 0.3% to $63.50 per barrel. The pullback comes after both benchmarks rallied more than $1 in the previous session, when geopolitical flare-ups in the Middle East and Eastern Europe briefly spurred risk premiums.
On Wednesday, oil traders had responded to Israel’s strike targeting Hamas leadership in Qatar and Poland’s activation of NATO-backed air defenses to counter suspected Russian drones over its airspace during Ukraine strikes. However, despite the elevated geopolitical backdrop, traders appeared to conclude that neither incident posed an imminent threat to global energy flows.
The recent rebound in crude prices, which followed a three-month low recorded on 5 September, has now given way to renewed scrutiny of market fundamentals. Weakening consumption indicators across major economies have heightened supply-demand imbalances. China’s crude imports continue to expand, albeit at a slower pace, while India’s agreements with Russia provide alternative supply channels. Meanwhile, U.S. import volumes remain volatile.
According to the U.S. Energy Information Administration (EIA), commercial crude inventories rose by 3.9 million barrels for the week ending 5 September, far exceeding analysts’ expectations of a 1 million barrel drawdown. Gasoline stocks climbed by 1.5 million barrels, also defying projections of a decline.
Strategic petroleum reserves—excluded from commercial inventory levels—were up 500,000 barrels to 405.2 million. U.S. oil output climbed by 72,000 barrels per day (bpd), reaching approximately 13.49 million bpd for the week ending 16 May, further cementing the country’s position as the world’s leading crude producer.
At the same time, U.S. crude imports dropped by 471,000 bpd to 6.27 million bpd, while exports fell by 1.1 million bpd to 2.745 million bpd. In its Short-Term Energy Outlook released on 10 September, the EIA projected that U.S. production would average 13.4 million bpd in 2025.
The build-up in inventories comes amid signals of cooling U.S. economic activity. A weaker labor market and declining producer prices are fueling expectations of slowing demand, further clouding the outlook for oil consumption in the near term.
