WTI oil price drops below $72.5 after a sharp surge in U.S. crude stockpiles
WTI oil falls below $72.50 amid rising inventories
West Texas Intermediate (WTI) fell below $72.5 per barrel on Wednesday, ending a three-day winning streak as the American Petroleum Institute (API) reported a significant increase in U.S. crude inventories. The 9.04 million-barrel build in the previous week was the largest in a year, surpassing market expectations of 2.8 million barrels.
The increase in stockpiles has raised concerns about potential oversupply in the market, despite ongoing geopolitical tensions that could disrupt oil production. Traders are now awaiting confirmation from the Energy Information Administration (EIA), whose data is set for release later today.
USOIL price movement (Jan 2025 - Feb 2025) Source: TradingView.
Geopolitical risks provide some support
While higher inventories have put downward pressure on prices, escalating geopolitical tensions in the Middle East continue to pose a threat to supply chains. Israeli Prime Minister Benjamin Netanyahu warned that Israel would resume intense military operations in Gaza if Hamas does not release hostages by Saturday noon. U.S. President Donald Trump also urged Israel to end the ceasefire, increasing the risk of renewed conflict in the region.
At the same time, U.S. sanctions on Russian and Iranian oil exports have further strained supply. Recent drone attacks on Russian oil refineries have disrupted production, with reports suggesting that Lukoil’s Volgograd refinery has reduced throughput by more than half, while Rosneft’s Ryazan facility remains offline. Meanwhile, sanctions on Iranian crude shipments to China could tighten global supply if enforcement efforts intensify.
OPEC report and upcoming data in focus
Oil traders are also looking ahead to OPEC’s monthly market report, due later today, along with the International Energy Agency’s (IEA) market report on Thursday. The EIA’s Short-Term Energy Outlook predicts that U.S. crude production in 2025 will rise modestly by 40,000 barrels per day (bpd), bringing the annual average to a record 13.59 million bpd.
Despite the recent decline in WTI prices, analysts suggest that the market remains in flux. A further rise in U.S. inventories or weaker-than-expected demand data could push prices lower, while any fresh disruptions to supply could reignite bullish momentum.
Previously, discussions centered around whether OPEC+ would maintain its current production cuts to offset rising US production, a decision that could impact oil’s price direction in the coming months.
