Oil falls as US inventories rise

Oil extended its decline after an unexpected surge in U.S. inventories overshadowed rising geopolitical risks in the Middle East. Global benchmark Brent was trading around $77 a barrel after falling 1 percent on Wednesday, while U.S. crude remained below $72. The Energy Information Administration reported that crude inventories rose by 1.3 million barrels last week as exports fell and refineries processed less crude. The American Petroleum Institute had instead signaled a decline. Meanwhile, tensions continued to rise in the Middle East as the U.S. and its allies weighed options for retaliation against Yemen-based Houthi militants for attacks on ships in the Red Sea. The attacks have reduced the number of tankers carrying crude and petroleum products through the Bab al-Mandeb Strait by about a third from a year ago, according to Vortexa data. Crude has struggled to find a clear direction so far this year, swinging between daily gains and losses as investors try to gauge the outlook. The market will be relatively balanced in 2024, according to Vitol Group, as demand growth struggles to keep pace with new supply from outside OPEC. “This is a lopsided tug-of-war between a bearish outlook for global oil supply and demand, and a temporarily supportive risk premium from the Red Sea incursions and tensions. It looks more likely to be panic selling than protective buying,” said Vandana Hari, founder of Vanda Insights.