Oil prices fell on Wednesday, with Brent crude dropping by 1.42% to settle at US$74.96 per barrel and U.S. West Texas Intermediate (WTI) crude slipping 1.35% to US$70.77. The decline followed a report from the US Energy Information Administration (EIA) showing an unexpectedly large increase in crude inventories, which rose by 5.5 million barrels last week, exceeding analysts' predictions.

The rise in stockpiles came as refinery activity recovered, but it was partly attributed to a rebound in crude imports following disruptions caused by Hurricane Milton. Refinery runs also increased as seasonal maintenance ended, leading to a build-up in gasoline supplies, although distillates saw a minor drop.

Despite the dip in oil prices, the market remained on edge due to ongoing geopolitical tensions in the Middle East. Concerns over potential oil supply disruptions continued, particularly as Israel launched strikes on the Lebanese city of Tyre, adding to fears of prolonged conflict in the region. These tensions have led traders to remain cautious, despite US efforts to broker a ceasefire.

Adding pressure on oil, the US dollar index hit its highest level since July, making oil more expensive for buyers using other currencies, thereby affecting demand.

As oil markets remain volatile, analysts suggest that any further developments in the Middle East could trigger significant price movements.

Reuters