Crude oil prices dipped on Thursday as a surprise rise in U.S. oil inventories and growing uncertainty over geopolitical developments unsettled the market.
The U.S. Energy Information Administration (EIA) reported a 1.3 million-barrel increase in crude stockpiles last week, alongside gains of 800,000 barrels in gasoline and 600,000 barrels in middle distillates. The build caught many traders off guard, triggering a pullback in prices that had been trending upward earlier in the week.
At the time of writing, Brent crude traded at $64.82 per barrel, while U.S. benchmark WTI hovered at $61.50, both marking declines from the previous session’s close.
While the inventory report pressured benchmarks, market watchers believe seasonal demand could soon reverse the trend. “Investors are betting that the summer driving season, beginning after Memorial Day, will tighten fuel supplies and ease current bearish pressure,” said Hiroyuki Kikukawa, an analyst at Nissan Securities, in comments to Reuters.
Meanwhile, geopolitical risks continue to inject volatility. Talks between the U.S. and Iran remain stalled, with both sides maintaining hardline positions on Iran’s nuclear programme. The next round of discussions is set to begin tomorrow in Rome, but expectations for a breakthrough are low.
Earlier this week, prices briefly rallied on reports that Israel is considering direct strikes on Iranian nuclear sites. CNN, citing U.S. officials, noted that the risk of such military action “has risen significantly in recent months.” The report pushed oil prices up by roughly 1% at the time.
In addition, the possibility of a resolution in the Russia-Ukraine conflict and shifting U.S.-Iran dynamics are keeping traders cautious. Any movement on either front could reshape supply expectations, but for now, the outlook remains murky.
Traders Brace for Volatile Summer as Drivers Hit the Road
With geopolitical tensions simmering and inventories on the rise, the summer driving season may emerge as the next key driver of oil prices. Analysts say demand patterns in the coming weeks will be critical to determining whether the current dip is temporary or a sign of a broader correction.