Oil prices edged lower on Wednesday, with the U.S. benchmark crude slipping nearly 1% after a surprising rise in crude stockpiles in the U.S., the world’s largest producer and consumer of petroleum. As of 12:14 p.m. EST (1714 GMT), Brent crude futures were down 43 cents, or 0.6%, at $77.06 per barrel, while U.S. crude futures dropped 64 cents, or 0.9%, to $73.13.
The latest data from the U.S. Energy Information Administration (EIA) revealed that crude oil stockpiles rose by 3.46 million barrels last week, a larger-than-expected increase. Analysts had forecasted a 3.19 million-barrel increase, but refiner intake continued its decline for the third consecutive week, further contributing to the increase in stockpiles. The unexpected build-up in U.S. crude inventories added to the bearish sentiment in the market.
Analysts believe that oil trading could remain volatile in the short term, influenced by several global uncertainties. These include the ongoing U.S. tariff threats, sanctions on Russian energy flows, and economic growth concerns in major oil-consuming countries. UBS analyst Giovanni Staunovo advised clients on Wednesday that a prudent approach was warranted, given the prevailing uncertainties. Staunovo also noted that, while oil prices are expected to remain supported at current levels, any news related to U.S. President Donald Trump’s policies, particularly regarding tariffs, is likely to cause further volatility.
The U.S. administration’s recent reaffirmation of President Trump’s plan to impose 25% tariffs on imports from Canada and Mexico, effective February 1, has added to the growing concerns. Traders are also closely monitoring the upcoming OPEC+ ministerial meeting scheduled for February 3. The key focus of this meeting will be the group’s plan to increase oil supply starting in April, a move that could have a significant impact on global oil prices.
President Trump has previously called on OPEC+ to lower oil prices, but with the group’s meeting just around the corner, delegates have indicated that no significant policy changes are expected. Supply concerns that had previously driven oil prices higher have temporarily eased. Libya’s National Oil Corporation (NOC) reported that its export activities were running normally after it held discussions with protesters who had previously threatened to halt loadings at one of the country’s main oil ports. While Libya’s oil production remains vulnerable to disruptions due to the ongoing civil conflict, the immediate risk has been mitigated for now.
As the global oil market grapples with a complex mix of factors, including stockpile increases, geopolitical tensions, and production adjustments, oil traders are bracing for continued volatility in the near future. With numerous moving parts at play, from tariff threats to OPEC+ strategies, the oil market is expected to remain choppy as investors react to every new development.
