Crude Prices Tumble on Rising US Inventories and Weak Demand Outlook

The NYMEX March West Texas Intermediate contract dropped $1.62 to $63.01/bbl by midday Thursday, while ICE April Brent fell $1.71 to $67.69/bbl. Refined products followed the downward trend, with March RBOB gasoline shedding over 6 cents and March ULSD falling to $2.3808/gal. These losses occurred despite high-level diplomatic discussions between President Trump and Israeli Prime Minister Netanyahu regarding Iran's nuclear program and regional stability.

Market participants remain wary of potential disruptions in the Strait of Hormuz, a critical chokepoint where roughly 20% of global oil consumption—approximately 20 million b/d—transits daily. However, these geopolitical risks were largely eclipsed by immediate bearish signals from the domestic market and international energy reporting agencies.

Inventory Surges and Weakening Demand

The Energy Information Administration reported on Wednesday that U.S. crude holdings rose by 8.5 million barrels to 428.8 million barrels for the week ended Friday. This substantial build has reinforced concerns that domestic supply is outstripping current consumption rates.

Further weighing on sentiment, the International Energy Agency (IEA) on Thursday revised its 2026 global oil demand growth forecast downward to 850,000 b/d. The agency also projected a global supply increase of 2.4 million b/d this year, reinforcing expectations for a potential surplus that could continue to depress prices through next year.