Oil Prices Plummet 2% Amid Weak Demand and Supply Disruptions
Oil prices dropped by over 2% on Thursday after investors grew concerned about weak global demand and a significant increase in US crude inventories. This reversal of fortune comes after a week of gains, with Brent futures closing at $87.07 a barrel, down from $89.98 the previous day. The decline was also influenced by reports that Yemen's Houthis had targeted a Saudi Aramco refinery with drones, raising concerns about supply disruptions in an already tight global market.
The data released by the US Energy Information Administration showed that US commercial crude oil inventories rose by 17.4 million barrels to 424.4 million in the week ended August 7, marking their highest level since June 5. This sharp increase in inventory was due to a slump in exports, which weighed on investor sentiment and led to the decline in oil prices.
The news also caused US West Texas Intermediate (WTI) crude to close down at $81.25 a barrel, erasing gains made over the previous five sessions. The decline in prices underscores the ongoing uncertainty surrounding global energy markets, as investors remain cautious about potential disruptions and supply chain issues.