Oil prices edged lower on Wednesday as rising U.S. fuel inventories and concerns over the economic fallout from U.S. tariffs overshadowed stronger crude draws and some improving demand signals. Brent settled down 19 cents, or 0.3%, at $68.52 per barrel, while U.S. West Texas Intermediate (WTI) fell 14 cents, or 0.2%, to $66.38.
EIA data showed a bullish 3.9 million barrel drop in U.S. crude stocks, well above the forecasted 552,000-barrel draw. However, gasoline inventories jumped by 3.4 million barrels and distillates by 4.2 million barrels, both exceeding expectations and raising demand concerns. Refinery utilization remained near yearly highs at 94%, but implied gasoline demand slipped to 8.5 million bpd, disappointing during peak summer driving season.
Broader economic sentiment was weighed by the continuation of President Trump’s tariff threats, with the EU preparing retaliation if talks falter. Meanwhile, Trump reiterated a 50-day ultimatum for Russia to end the Ukraine war or face “very severe” sanctions. U.S. rate futures climbed on speculation about Federal Reserve leadership changes and possible rate cuts beginning in September, which could ultimately support energy demand.
Globally, OPEC maintained a positive second-half outlook for the world economy, citing stronger-than-expected performance from Brazil, China, and India. Chinese state refiners have increased output to meet rising Q3 demand and replenish historically low diesel and gasoline stocks. Barclays estimates China’s H1 oil demand grew by 400,000 bpd to 17.2 million bpd.
On the supply side, drone attacks for a third consecutive day cut oil production in Iraq’s Kurdistan region by up to 150,000 bpd, further complicating regional output amid ongoing geopolitical risks.