Oil prices declined on Wednesday, following a mixed report on U.S. crude inventories. Persistent concerns over slowing economic growth and weak demand continued to exert downward pressure on prices.
Attention also remained focused on any new developments in the conflict between Israel and Hamas. Fears of a broader regional conflict offered some support to crude prices in recent sessions.
Brent crude oil futures for October delivery fell 0.5 percent to $76.13 per barrel, while West Texas Intermediate (WTI) crude futures dropped 0.4 percent to $75.70 per barrel as of 21:12 ET (01:12 GMT).
Mixed signals from inventory data
The American Petroleum Institute (API) reported that U.S. oil inventories grew by 180,000 barrels in the week ending August 2nd, less than the expected build of 850,000 barrels. However, gasoline and distillate stockpiles rose by 3.3 million and 1.2 million barrels respectively, signaling cooling travel demand as the summer season comes to an end.
The API data typically foreshadows a similar reading from the official government inventory report, due later on Wednesday.
Recession fears weigh on oil prices
Oil prices have been under pressure amid growing concerns that a potential U.S. recession could dent oil demand in the coming months. Weak labor market data and purchasing managers’ index readings from the U.S. over the past week have reinforced these recession fears, leading to a broader selloff in commodity markets.
Read more: Oil prices rebound over 1 percent as Middle East tensions offset demand concerns
Bearish demand outlook persists
Oil was already grappling with a bearish demand outlook, with expectations of a market surplus emerging by 2025. A recent OPEC meeting did little to bolster crude prices, as the cartel signaled no changes to production despite the weakness in prices. However, top producers Saudi Arabia and Russia did further downplay plans to increase output later this year.
Geopolitical risks provide some support
Oil prices were prevented from falling to new seven-month lows by some risk premium in the market, as traders remained concerned that an escalation of the conflict between Israel and Hamas could disrupt regional oil supplies.
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