Oil prices fall after surprise inventory build in US

Ines Ferré
·Senior Business Reporter
Updated 2 min read
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Oil prices, which had risen for a second day in a row on Wednesday amid escalating attacks by Houthi rebels in the Red Sea, fell into negative territory after inventory data showed a surprise build in the US.

West Texas Intermediate (CL=F) ended the session down more than 1% to settle at $71.37 per barrel. Brent (BZ=F) futures closed lower at $76.80 per barrel.

Oil prices pared back earlier gains after the latest Energy Information Administration data showed a surprise crude build of 1.34 million barrels last week, versus expectations for a draw.

Oil prices had been trading higher during the session after Houthi rebels backed by Iran launched their largest drone and missile attacks on vessels in the Red Sea, an important waterway that connects to the Suez Canal. The attacks are in response to the Israel-Hamas war.

Since mid-November "at least 23 commercial vessels have been targeted," according to Freightos Terminal, a shipping data platform.

Cargo giants Maersk (MAERSK-A.CO, MAERSK-B.CO) and Hapag-Lloyd (HLAG.DE) have paused shipments via the waterway until further notice.

The companies are forced to send shipments around the cape of Africa, making their trips longer.

“Given the current conditions many analysts are once again calling for world oil consumption to outstrip supply into the first quarter of this year, especially if OPEC remains diligent on production cuts," Dennis Kissler, senior vice president at BOK Financial, said on Wednesday.

An aerial view of a crude oil storage facility is seen on May 5, 2020 in Cushing, Oklahoma. - Using his fleet of drones, Dale Parrish tracks one of the most sensitive data points in the oil world: the amount of crude stored in giant steel tanks in Cushing, Oklahoma. The West Texas Intermediate oil stored in the small town in the midwestern United States is used as a reference price for crude bought and sold by refiners in Asia, hedge funds in London and traders in New York. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
An aerial view of a crude oil storage facility is seen on May 5, 2020 in Cushing, Okla. (JOHANNES EISELE/AFP via Getty Images) (JOHANNES EISELE via Getty Images)

Crude futures rebounded on Tuesday on signs Russian crude exports started 2024 in line with cuts promised by the OPEC+ member. The rebound was a reversal from Monday when prices started the week down more than 3%.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.

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