WionDrive News Desk 
Oil prices fell by 1% on Wednesday, settling lower after US crude stockpiles showed a smaller-than-expected draw. Prices were also impacted by persistent concerns over Chinese oil demand, though losses were mitigated by ongoing supply risks in the Middle East and Libya.
Brent crude futures closed at USD 78.65 a barrel, down 90 cents or 1.13%, while US West Texas Intermediate (WTI) crude futures ended at USD 74.52, a decline of USD 1.01 or 1.34%. This drop followed a more than 2% decline on Tuesday, despite recent gains that had pushed Brent above USD 81 a barrel and WTI above USD 77.
Data from the Energy Information Administration (EIA) revealed a decrease in US crude inventories by 846,000 barrels, bringing the total to 425.2 million barrels. This draw was smaller than the 2.3 million barrels anticipated by analysts in a Reuters poll. Despite a rise in refining activity, Matt Smith, lead oil analyst at Kpler, noted that the smaller-than-expected draw was surprising given strong refinery runs. He attributed the discrepancy to continued strength in imports and a slight decrease in exports.
Concerns about Chinese oil demand also weighed on prices. Recent data pointed to a struggling Chinese economy and slower-than-expected oil demand from refiners. “Demand in China remains weak, and the anticipated rebound in the second half has yet to materialise,” said Amarpreet Singh, an analyst at Barclays.
The decline in prices was partly offset by risks to supply. In Libya, disputes between rival government factions have led to halted oil production at several fields, potentially affecting around 1.2 million barrels per day. Giovanni Staunovo, an analyst at UBS, noted that while the disruptions could tighten the market, investors are waiting to see a significant drop in Libyan crude exports.
In the Middle East, the ongoing conflict between Israel and Hamas, coupled with recent hostilities between Israel and Hezbollah, continues to contribute to geopolitical risks that could impact oil markets. Tim Snyder, chief economist at Matador Economics, highlighted that these geopolitical factors are likely to keep crude oil prices volatile.
