Oil prices slide as rising US inventories deepen concerns over weak demand

Oil prices slipped on Wednesday as new figures from the United States suggested that crude and fuel supplies are growing faster than demand, adding fresh pressure to a market already wrestling with signs of oversupply.

Brent crude eased to 64.61 dollars a barrel in early trade, down slightly after a brief rebound a day earlier. US West Texas Intermediate also edged lower to 60.5 dollars a barrel. Traders said the drop reflected renewed worries that the world’s largest oil consumer is not burning through fuel at the pace many expected heading into winter.

Inventory build sparks caution

The latest estimates from the American Petroleum Institute painted a softer picture of US demand. According to market sources, crude stocks rose by more than 4 million barrels in the week ending November 14. Petrol and distillate supplies also increased, reinforcing views that refiners are facing a slower market at home.

A research note from Chinese brokerage Haitong Futures said the larger inventories suggested weakening consumption. The firm said the increase in crude and fuel stocks gave the market a bearish signal and may limit gains in the near term.

Official figures from the US government are expected later on Wednesday. Analysts surveyed ahead of the report had predicted a small drawdown, not a sizeable build, adding to the sense of uncertainty in trading circles.

Geopolitical risks offer only limited support

Prices had climbed on Tuesday as investors weighed the possible impact of US sanctions on Russian oil flows. Ukrainian strikes on Russian refineries and export facilities have also raised fears of fresh disruptions to fuel supplies.

Those concerns led to stronger profit margins for diesel in Europe, where refiners are benefiting from tighter supplies and firmer demand. Diesel margins reached their highest level since September 2023 this week, giving some lift to the broader fuel market.

Even so, analysts said the support was not strong enough to offset the broader pressure from oversupply. A steady rise in global production, combined with signs of slower demand growth, has capped any meaningful recovery in crude prices in recent weeks.

Haitong Futures noted that the strong diesel market was offering a temporary floor for prices but warned that the persistent oversupply of crude was keeping many investors from making bold bets.

Washington hints at tougher measures on Moscow

In Washington, a senior White House official said President Donald Trump was prepared to sign new legislation tightening sanctions on Russia, provided the final decision on enforcement remains with him. The proposed measures include secondary sanctions on buyers of Russian crude, a move that could squeeze Moscow’s export outlets.

Market watchers said tougher sanctions may lend some support to oil prices in the coming weeks, although many believe the overall direction will still depend on whether demand picks up or production slows.