Oil prices fall on weak us demand

Oil prices slipped after industry data signalled weakening demand in the United States, the world’s largest oil consumer, while supply‑side risks continued to shape market sentiment. International benchmark Brent crude traded near $64.30 a barrel, down about 0.4% from the prior close, while U.S. West Texas Intermediate (WTI) fell roughly 0.4% to about $60.45.

The downturn followed American Petroleum Institute (API) data showing a larger‑than‑expected build in U.S. commercial crude stocks—up 4.4 million barrels for the week—alongside increases in gasoline inventories (+1.55 million barrels) and distillates (+577,000 barrels). Market attention was on the forthcoming official weekly report from the U.S. Energy Information Administration (EIA). Traders interpreted the inventory swell as evidence of softer fuel consumption in the United States, exacerbating concerns that demand growth may be lagging amid signs of a cooling economy.

Despite demand worries, supply factors remain prominent. U.S. sanctions on major Russian producers have forced global firms to sever ties with Rosneft and Lukoil by the compliance deadline, a move Washington says is already constraining Russian oil revenues and is likely to reduce exports over time. Some buyers in China and India are reported to be seeking alternative suppliers. At the same time, analysts note that global output continues to exceed demand, and planned output increases from certain OPEC+ members could add further downward pressure on prices unless consumption picks up.

Regional market dynamics showed contrasts: diesel refining margins in Europe surged to their highest level since September 2023 after Ukrainian strikes on Russian energy and port infrastructure disrupted fuel flows, lifting refinery profitability amid tighter diesel availability. That spike underscores how localized supply shocks can boost margins even as global crude prices face downward pressure.

Investor sentiment has shifted toward caution, with traders weighing the inventory data, macroeconomic indicators and the prospect of renewed OPEC+ production increases. Unless U.S. and global demand show clearer signs of recovery, analysts warn oil markets may remain under pressure from persistent oversupply. However, geopolitical developments and sanctions effects on Russian exports keep upside risks alive, leaving prices sensitive to further disruptions.

Overall, the market is navigating a fragile balance: inventory builds and demand concerns drag on prices, while sanctions and conflict‑related disruptions sustain the potential for supply shocks that could tighten markets and lift margins regionally.