Oil prices fell slightly Wednesday after U.S. data showed bigger-than-expected increases in gasoline and diesel inventories. This added to concerns about oversupply amid ongoing OPEC+ production rises and global trade tensions.
Brent crude futures dropped 28 cents to $65.35 a barrel, while U.S. West Texas Intermediate crude fell 8 cents to $63.33 by mid-morning EDT.
The U.S. Energy Information Administration reported a 4.3 million barrel decline in crude oil inventories last week, much larger than the expected 1 million barrel drop. However, gasoline stocks rose by 5.2 million barrels, far exceeding the forecasted 600,000 barrel increase. Distillate inventories also climbed by 4.2 million barrels, well above the 1 million barrel estimate.
Analysts called the report bearish due to the large builds in refined fuel products. Although refinery demand for crude was strong, weaker demand after the Memorial Day holiday caused refined product stockpiles to grow sharply.
Adding pressure, OPEC+ plans to boost output by 411,000 barrels per day in July. Saudi Arabia and Russia recently agreed on this increase after some debate, with Saudi Arabia pushing for more output and Russia favoring a pause.
Meanwhile, Russia reported a 35% drop in May oil and gas revenues, which may make it reluctant to support further production hikes.
Trade tensions remain high as U.S. President Donald Trump and Chinese leader Xi Jinping prepare for talks. The Organisation for Economic Co-operation and Development (OECD) recently lowered its global growth forecast, citing the impact of trade disputes on the U.S. economy and oil demand.
Wildfires in Canada provided some support to prices by reducing output by an estimated 344,000 barrels per day.
Overall, analysts see limited upside for oil prices due to concerns over a supply glut and weakening demand growth.
