Brent crude oil price fell 1.55% to $107.06 a barrel on Wednesday, while West Texas Intermediate (WTI) dropped 2.46% to $103.23, as an unexpected increase in US crude inventories eased some concerns over tightening global supplies.
The decline came after both benchmarks rallied sharply on Tuesday amid fresh concerns over disruptions to Saudi Arabia’s oil exports. Brent had settled at about $108.75 a barrel on Tuesday, while WTI rose to $105.83, gaining more than $4 during the session.
The American Petroleum Institute reported that US crude inventories increased by approximately 7.1 million barrels in the week ended September 11, substantially exceeding expectations for a decline of about 1.6 million barrels.
Saudi Arabia however remains a major focus for oil traders after attacks damaged its East-West oil pipeline, disrupting the route used to transport crude from the kingdom’s eastern production areas to the Red Sea.
The disruption has affected exports through Yanbu, where crude loadings have been halted. Some European customers have also reportedly been informed of cancellations for September cargoes.
Saudi Arabia is attempting to compensate for the disruption by increasing crude shipments through alternative routes. Saudi Aramco has offered additional crude to Asian refiners through ship-to-ship transfers off Sohar, Oman, allowing cargoes to bypass the Strait of Hormuz. Loadings at Saudi Gulf ports including Ras Tanura and Juaymah have also increased.
These alternative export arrangements have helped moderate some of the market’s immediate supply fears. Reuters reported that the additional Saudi crude available through Oman contributed to Wednesday’s decline in oil prices.
Oil prices have nevertheless remained substantially above their levels at the beginning of September. Brent was trading around the $97-a-barrel range early in the month, while WTI was around the low-$90s before the recent rally accelerated.
