Oil prices eased on Wednesday after a two-day rally, as a sharp increase in US crude inventories offered some relief to markets despite ongoing supply disruptions in the Middle East.
Brent crude futures fell 73 cents, or 0.67 percent, to $108.02 a barrel by 0450 GMT. US West Texas Intermediate (WTI) crude dropped $1.10, or 1.04 percent, to $104.73.
The decline came after both benchmarks gained more than $3 on Tuesday, closing at their highest levels since May 19. Concerns over disrupted supplies from Saudi Arabia had driven the earlier gains.
Data from the American Petroleum Institute (API) showed US crude inventories increased by 7.1 million barrels in the week ended September 11. The rise was far above the 1.6 million-barrel draw analysts had expected, according to a Reuters poll.
US gasoline and distillate stocks also increased last week. The unexpected rise in fuel inventories added pressure on oil prices, as it pointed to softer demand and gave traders some room to reassess the recent rally.
However, the inventory build has not removed concerns over global supply. Haitong Futures said the rise in US stocks did not change the underlying tightness in the global crude market.
Traders remain focused on disruptions to physical oil supplies in the Middle East, particularly in Saudi Arabia.
The country’s East-West pipeline and Yanbu export facilities have faced disruptions following attacks on Saudi energy infrastructure. Oil loadings at Yanbu port were suspended after Saudi Arabia shut the pipeline following a Houthi attack on Friday, according to sources.
Saudi Arabia is now offering additional crude shipments to Asian refiners through ship-to-ship transfers off Oman’s Sohar port, people familiar with the matter said.
The disruptions have also tightened fuel markets. European diesel futures reached a record high on Tuesday, reflecting concerns over reduced flows of crude and refined products from the region.
Shipping activity through the Strait of Hormuz has also fallen sharply. Preliminary data showed only four visible vessel transits through the waterway on Tuesday, down from seven a day earlier and well below the 10-day average of 18.
The Strait of Hormuz is a major route for global energy supplies. Before the US-Israeli war on Iran began, it carried about a fifth of the world’s oil and liquefied natural gas supply.
With regional attacks continuing, traders are weighing the impact of weaker US inventory data against the risk of further disruptions to global oil flows.
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