Oil Prices Plummet on Unexpected Inventory Build and Waning Demand
Oil prices dropped on Thursday after the US Energy Information Administration (EIA) reported an unexpected build in US commercial crude oil inventories. The global benchmark slipped 2.2% to settle at $86.99 a barrel, while the September contract shed 2.5% to settle at $81.18 a barrel.
The EIA data showed that US commercial crude oil inventories excluding the Strategic Petroleum Reserve (SPR) rose by 17.4 million barrels in the week of August 7 to a total of 424.4 million barrels, the highest level since June 5. This exceeded expectations of a draw of 1.7 million barrels.
Market participants also focused on forecasts about global demand, which were revised downward by the International Energy Agency (IEA). The IEA now expects world oil demand in 2026 to decline by 1.6 million barrels per day, 510,000 barrels per day more than its previous estimate.
The Strait of Hormuz remained a source of uncertainty, with both the US and Iran continuing to assert their right over the waterway. Iranian state media said the strait remained under Tehran's 'full control,' citing comments from the Iranian Armed Forces.