The prices of oil dropped on Wednesday after a recent report on US crude inventories showed a much larger increase than expected.
The US West Texas Intermediate (WTI) crude saw a 1.4% or $0.97 slide to close the day at $70.77 per barrel. Brent crude, on the other hand, closed at $74.96 per barrel following a fall of 1.42% or $1.08.
Oil dropped earlier in October on optimism of a larger supply as well as weaker demand in China. It started recovering again throughout the first two days of this week before the sudden change caused by US crude inventories.
According to the Energy Information Administration’s (EIA) weekly update, the US crude inventories have climbed to 426 million barrels following the addition of 5.5 million barrels last week. Analysts, on the other hand, expected an increase of only 270,000 barrels, while the industry group projected a 1.6 million-barrel rise.
According to Lipow Oil Associates’ Andrew Lipow, the unexpected increase could be attributed to ramped-up import activity as well as demand following Hurricane Milton.
“The large crude oil inventory build this week is offsetting the drop last week. But a lot of this is a result of the rebound in crude oil imports, a lot of it had to do with the hurricane,” said Lipow via CNBC.