Oil Prices Dip on US Inventory Build Amid Middle East Disruptions

Oil prices retreated on September 16 after industry data showed an unexpectedly large build in US crude inventories, though supply disruptions around the Strait of Hormuz and Saudi Arabia's Red Sea export route kept both benchmarks above $100 a barrel.

The American Petroleum Institute reported that crude inventories rose 7.1 million barrels in the week ended September 11, against expectations of a 1.6 million-barrel draw. This was accompanied by a 1.5 million-barrel increase in gasoline stocks and a 1.6 million-barrel rise in distillates.

Despite the inventory surprise, Haitong Futures cautioned that regional stock increases do not change the underlying tightness in the global crude market.

The bigger concern remains disruption to Saudi Arabia's East-West pipeline and Yanbu export infrastructure following attacks on Saudi energy facilities. Saudi Arabia suspended loadings at Yanbu and cut September shipments to European customers after drone attacks damaged the pipeline carrying about 7 million barrels a day to the Red Sea.