WionDrive News Desk 
Oil prices experienced a decline on Wednesday, following two consecutive sessions of gains. This downturn was primarily attributed to an industry report revealing an increase in U.S. crude and fuel inventories, which overshadowed the potential bullish impacts of rising tensions in the Middle East and the anticipation of a U.S. interest rate cut.
According to sources citing American Petroleum Institute (API) figures, U.S. crude stocks saw a rise of 1.96 million barrels in the week ending September 13. Both gasoline and distillates inventories showed increases.
The market response was evident in the futures prices. Brent crude futures for November delivery dropped by 92 cents, or 1.25 per cent, to USD 72.78 per barrel at 1100 GMT. Similarly, U.S. crude futures for October fell by 95 cents, or 1.33 per cent, to USD 70.24.
Ole Hansen of Saxo Bank commented on the situation, noting that the weekly build in U.S. crude and fuel stocks reported by the API had offset the sustained tensions in the Middle East, leading to softer crude prices. He also pointed out that while Brent has shown recovery since falling below USD 70 to its lowest since December 2021 on September 10, it faces resistance around USD 75 due to weak global refinery margins, indicating sluggish demand.
Mazen Salhab, Chief Market Strategist MENA at BDSwiss, attributed the price drop to the end of peak summer demand and a negative shift in traders’ sentiment. However, he cautioned that potential conflicts in the Middle East still pose a risk of supply disruptions.
The market was also closely watching the Federal Reserve’s decision on interest rates, expected at 1800 GMT. There was a 63 per cent chance priced in for a 50 basis-point reduction, which would mark the first interest rate cut in more than four years. UBS analyst Giovanni Staunovo suggested that the uncertainty surrounding the magnitude of the likely Fed rate cut was contributing to investor caution.
Oil prices found some support from the increased risk of violence in the Middle East potentially disrupting supply. Hezbollah accused Israel of attacking the militant group with explosive-laden pagers in Lebanon and promised retaliation, while Israel’s military declined to comment on the blasts.
Market participants were eagerly awaiting the latest round of official U.S. inventory data from the Energy Information Administration, due at 1430 GMT. Analysts polled by Reuters estimated, on average, that crude inventories fell by about 500,000 barrels, while distillate and gasoline stocks increased slightly.
