Onome Amuge
Oil prices eased on Wednesday as concerns over faltering demand for refined fuels outweighed a sharper-than-expected drawdown in US crude inventories and mounting geopolitical risks to supply.
Brent crude, the international benchmark, settled 52 cents, or 0.76 per cent, lower at $68.22 a barrel. West Texas Intermediate, the US marker, slipped 47 cents, or 0.73 per cent, to $64.05.
Data from the US Energy Information Administration (EIA) showed crude inventories fell last week amid an increase in exports and a sharp drop in imports. Yet analysts said a surprise build in distillate stockpiles, which include diesel and heating oil,raised questions about underlying demand.
“Markets are responding on diesel, which is the soft underbelly of the entire complex,” said Phil Flynn, senior analyst at Price Futures Group. Diesel is widely used in freight transport, agriculture and industry, and its weakness is often viewed as an indicator of slowing economic activity.
Meanwhile, the Federal Reserve on Wednesday cut interest rates by a quarter point, as expected, and signalled that borrowing costs would fall steadily through the rest of the year to counter a cooling labour market.
While looser monetary policy is generally supportive for commodities, investors appeared unconvinced it would be enough to offset concerns over slowing global demand. “This was not unexpected. Right now the market is playing both sides in the middle,” Flynn added.
On the supply front, Kazakhstan said it had resumed shipments through the Baku-Tbilisi-Ceyhan (BTC) pipeline after a suspension last month caused by contamination. The BTC line is a critical export route to the Mediterranean for Caspian producers, and its restart adds barrels back into the market.
In Nigeria, President Bola Tinubu lifted a six-month emergency rule in Rivers state, one of the country’s main oil-producing regions. The move, according to analysts, could ease investor concerns over disruptions in Africa’s largest crude exporter, which has struggled with theft, sabotage and regulatory uncertainty.
Meanwhile, risks to Russian supply remained in focus after weeks of Ukrainian drone strikes on refineries and export infrastructure. Russia’s state pipeline monopoly Transneft warned oil producers they might be forced to cut output if the attacks continued to compromise logistics at key Black Sea and Baltic ports, according to industry sources.
The combination of softer refined product demand, renewed supply from Kazakhstan and Nigeria, and continued uncertainty over Russian flows left traders weighing conflicting signals.
Brent and WTI have both traded within a narrow band in recent weeks as markets digest shifting expectations for global growth and fuel consumption. Analysts say sentiment could remain subdued unless demand indicators improve or supply disruptions escalate.
