Oil Prices Slip 1% on Oversupply Fears, Strong U.S. Demand Limits Decline
Oil prices fell by 1% on Wednesday, pressured by growing concerns of a potential global oil oversupply. However, signs of robust U.S. fuel demand helped limit deeper losses in the market.
Brent and WTI Edge Lower
Brent crude futures dropped 79 cents, or 1.23%, to trade at $63.65 per barrel by 12:56 p.m. ET (1756 GMT). Meanwhile, U.S. West Texas Intermediate (WTI) crude declined 81 cents, or 1.34%, to $59.75.
The decline came after new U.S. government data showed a larger-than-expected increase in crude inventories last week.
“A rebound in imports and subdued refining activity during seasonal maintenance encouraged a build in U.S. crude inventories,” said Matt Smith, lead Americas oil analyst at Kpler.
U.S. Crude Inventories Rise Sharply
According to the Energy Information Administration (EIA), U.S. crude stocks rose by 5.2 million barrels to 421.2 million barrels last week — far above analysts’ expectations of a modest 603,000-barrel increase.
Despite the rise in crude supplies, strong gasoline demand provided some price support. Gasoline inventories fell by 4.7 million barrels to 206 million barrels, compared with expectations for just a 1.1 million-barrel decline.
Global Supply Concerns Intensify
Market sentiment was further pressured by policy signals from Canada. Prime Minister Mark Carney’s new budget plan suggested that the country may remove its cap on oil and gas emissions, potentially boosting output and worsening oversupply fears.
“Canada could abandon its emissions cap and unleash more oil,” said Phil Flynn, senior market analyst at Price Futures Group.
Meanwhile, OPEC+ announced plans to increase production by 137,000 barrels per day in December, while pausing any further hikes in the first quarter of 2026.
Regional Developments
In Kazakhstan, crude production (excluding condensates) fell by 10% last month to 1.69 million barrels per day, still slightly above the country’s OPEC+ quota, according to Reuters calculations.
Elsewhere, Russia’s Black Sea port of Tuapse suspended fuel exports, and its refinery halted crude processing after Ukrainian drone attacks damaged key infrastructure, according to industry sources and LSEG tracking data.
Despite the short-term support from disruptions and demand resilience, traders remain cautious as fears of an oil glut continue to dominate sentiment across global energy markets.
