By Nicole Jao
NEW YORK (Reuters) -Oil prices fell on Wednesday after data showed inventories rose more than expected even as refining activity recovered. However, futures continued to rise about 2% this week as traders factored in ongoing conflict in the Middle East.
futures settled at $74.96, down $1.08, or 1.42%. U.S. West Texas Intermediate crude futures fell 97 cents, or 1.35%, to $70.77.
Last week, oil prices fell by more than 7% due to concerns about Chinese demand and waning concerns about possible oil supply disruptions in the Middle East. Oil moved higher in the first two sessions this week as buyers emerged.
U.S. crude inventories rose by 5.5 million barrels to 426 million barrels in the week ended Oct. 18, the Energy Information Administration said Wednesday. This exceeded analyst expectations in a Reuters poll for an increase of 270,000 barrels.
“The large crude oil inventory built up this week offsets last week’s decline. But a lot of this is due to the recovery in crude oil imports, and a lot of that had to do with the hurricane,” said Andrew Lipow, president of Lipow Oil Associates, referring to the previous week’s decline due to lower imports and demand after Hurricane Milton.
Refineries rose further as facilities stopped seasonal maintenance in the fall, bringing a built-in gasoline, while distillates showed a small decline last week, analysts said.
Putting pressure on oil prices, oil prices rose to their highest level since late July. A firmer U.S. currency could hurt demand for dollar oil from buyers using other currencies.
The impact of crude oil inventories on prices was somewhat offset by continued concerns about the potential oil supply risk from conflict in the Middle East.
“The market continues to wait for Israel’s response to Iran’s missile attack,” ING analysts said, pointing to the lack of any outcome from US Secretary of State Antony Blinken’s latest visit to Israel.
Blinken urged a halt to fighting between Israel and the militant groups Hamas and Hezbollah on Wednesday, but heavy Israeli airstrikes on the Lebanese port city of Tire offered no respite.
“Market participants expected the conflict in the Middle East to drag on even longer, while a ceasefire agreement might cause some deadlock,” said IG market strategist Yeap Jun Rong.
