FX.co ★ Oil Steady as US Stock Build Offsets Red Sea Tensions

WTI crude oil futures experienced a modest increase, closing at $68.4 per barrel on Wednesday. This movement came as market participants assessed an unexpected rise in US crude inventories against escalating tensions in the Red Sea and predictions of decreased US production. The Energy Information Administration (EIA) disclosed a 7.1 million barrel increase in US crude stocks for the week ending July 4, contrary to the anticipated 2.1 million barrel reduction, even as gasoline and distillate stockpiles fell. Prices were bolstered by renewed Houthi attacks in the Red Sea, including an incident where a cargo ship was sunk, resulting in at least four fatalities among the crew. Additionally, market sentiment improved as the EIA revised its US production forecast for 2025 downwards, attributing this to decreased activity due to declining prices. Meanwhile, OPEC+ announced an output boost of 548,000 barrels per day for August, with sources suggesting a potential increase in September as voluntary cuts are phased out. The UAE’s energy minister observed that the market is absorbing the additional supply without significant inventory accumulation, indicating strong demand.