Oil prices fell more than 1% on Wednesday as a stronger dollar and large builds in U.S. fuel inventories last week pressured prices, reversing earlier gains from the tightening supplies from Russia and other OPEC members.
Brent crude was down 86 cents, or 1.12%, at $76.19 a barrel at 12:00 p.m. EST (1700 GMT). U.S. West Texas Intermediate crude fell 84 cents, or 1.13%, to $73.41.
Both benchmarks had risen more than 1% earlier in the session.
U.S. fuel inventories surged last week while crude stocks fell on stronger refining activity, according to data released on Wednesday from the U.S. Energy Information Administration.
Gasoline stocks rose by 6.3 million barrels last week to 237.7 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.5 million-barrel build, the EIA data showed.
Distillate stockpiles rose by 6.1 million barrels in the week to 128.9 million barrels, versus expectations for a 600,000-barrel rise.
“I would be concerned if we saw more substantial products builds over the next few weeks. And in the meantime, the cold snap could constrain crude oil supply and increase heating oil demand,” said Josh Young, chief investment officer at Bison Interests.
Crude inventories fell by 959,000 barrels to 414.6 million barrels in the week, compared with analysts’ expectations for a 184,000-barrel draw.
A stronger dollar also pressured prices by making oil more expensive for holders of other currencies.
“Crude oil took a minor tumble in response to a strengthening dollar following news reports that Trump is considering declaring a national economic emergency to provide legal ground for universal tariffs,” said Ole Hansen, analyst at Saxo Bank.
Limiting the losses, oil output from the Organization of the Petroleum Exporting Countries fell in December after two months of increases as field maintenance in the United Arab Emirates offset a Nigerian output hike and gains elsewhere in the group.
In Russia, oil output averaged 8.971 million barrels a day in December, below the country’s target, Bloomberg reported citing the energy ministry.
Analysts expect oil prices to be on average down this year from 2024 due in part to production increases from non-OPEC countries.
“We are holding to our forecast for Brent crude to average $76/bbl in 2025, down from an average of $80/bbl in 2024,” BMI, a division of Fitch Group, said in a client note.
Source: Reuters (Reporting by Nicole Jao in New York, Katya Golubkova in Tokyo, Jeslyn Lerh in Singapore and Arunima Kumar in Bengaluru; Editing by Kirsten Donovan, Peter Graff and Elaine Hardcastle)