The U.S. Energy Information Administration (EIA) reported an unexpected increase in domestic crude oil inventories today. Stockpiles rose by 3.1 million barrels for the week ending April 10. Analysts previously forecast a draw due to supply disruptions from the conflict in the Strait of Hormuz.
Resilient U.S. production and softening domestic demand are currently offsetting supply cuts from the Persian Gulf. Refinery utilization rates also decreased slightly during this period. This report provides the first major data since the start of the U.S. naval blockade of Iran.
WTI crude futures dropped below $90 per barrel following the announcement. Prices accelerated their decline after previously trading lower on hopes for diplomatic talks. The inventory build introduces a bearish signal to a market focused on geopolitical supply risks.