Oil prices Fall after Build-up in US Inventories

Oil prices fell during trading on Wednesday after US government data revealed a build-up in US crude oil and fuel inventories ahead of a period that typically sees increased summer driving, which boosts US demand.

This decline follows a roughly 1% rise in oil prices earlier in the day, following a CNN report about Israeli preparations for a possible strike on Iranian nuclear facilities, which raised concerns about supplies from the Middle East.

Brent crude futures fell  0.72% to $64.91 a barrel at the settlement.

WTI crude futures fell 0.74% to settle at $61.57 a barrel.

Latest Oil Prices:

WTI Crude         $61.57  -0.74%

Brent Crude      $64.65  -1.12%

Murban Crude  $64.38  -1.01%

Louisiana Light $66.47  -0.29%

Bonny Light      $78.62  -2.84%

Mars US             $72.21  -1.45%

Gasoline            $2.150  -0.11%

Natural Gas      $3.368  -1.72%

This comes after data released by the US Energy Information Administration on Wednesday showed that US crude oil inventories increased by 1.3 million barrels to 443.2 million barrels last week.

US gasoline inventories also increased by about 800,000 barrels during the week ending May 16, and distillate inventories rose by about 600,000 barrels during the same period.

The data caused oil prices to reverse course after rising following a report by CNN on Tuesday, citing informed US officials, who said that new intelligence obtained by the US indicated that Israel was preparing to strike Iranian nuclear facilities.

The report, citing the officials, indicated that it is unclear whether Israeli leaders have made a final decision regarding the operation.

"Such an escalation would not only put Iranian supplies at risk, but also large parts of the region," ING commodity strategists said today.

Giovanni Staunovo noted that fears of supply disruptions caused prices to rise today, given that Iranian oil exports exceed 1.5 million barrels per day.

There is also concern that Iran may take retaliatory measures if attacked, possibly including banning oil tankers from the Strait of Hormuz in the Persian Gulf, through which oil exports from Saudi Arabia, Kuwait, Iraq, and the UAE pass.