U.S. crude oil inventories unexpectedly surged, causing WTI oil prices to retreat under pressure.

The Foreign exchange CAPX exchangeprice of WTI crude oil in the United States fell on Wednesday as the latest data showed a surprising increase in U.S. crude oil inventories, raising concerns about an oversupply of crude oil. Previously, oil prices had reached a two-week high, but market sentiment has turned cautious.

WTI Oil Prices End Winning Streak

West Texas Intermediate (WTI) crude for June delivery on the New York Mercantile Exchange closed down by 52 cents, or 0.81%, at $63.15 a barrel on Wednesday. The day before, oil prices had just reached a two-week high, but they couldn't maintain their upward trend after the inventory data was released.

Inventory Surge Exceeds Expectations

According to the U.S. Energy Information Administration (EIA), as of last week, U.S. crude oil inventories increased by 3.5 million barrels, bringing the total inventory to 441.8 million barrels. This data deviated significantly from market expectations, prompting investors to reassess the current supply and demand situation.

In addition, the U.S. net import of crude oil increased by 422,000 barrels per day compared to the previous week, further intensifying market concerns about crude oil oversupply.

In fact, before the EIA data was released, the American Petroleum Institute (API) had reported on Tuesday that crude oil inventories had increased by 4.3 million barrels last week. Consecutive reports showing clearly ample supplies are exerting substantial downward pressure on oil prices.

Expert Opinion: Supply Exceeding Expectations Is the Main Downward Cause

UBS analyst Giovanni Staunovo stated, "The signal of a surge in inventories in the API report has already sounded an alarm for the market, and the official data from the EIA confirms this trend, undoubtedly putting sustained pressure on oil prices."

Mizuho Bank's Head of Energy and Commodities Bob Yawger also warned, "When market supply consistently exceeds the critical point of demand, oil prices will inevitably enter a downward path."

OPEC+ Lowers Non-OPEC Supply Growth Forecast

Despite OPEC and its allies maintaining their pace of production increases recently, OPEC+ on Wednesday lowered its forecast for crude oil supply growth from non-OPEC producers (including the United States) by 2025. Bob Yawger noted that while OPEC+ maintains a high demand expectation and continues to increase production, it could exacerbate the global crude oil market's supply and demand imbalance.

Overall, the oil market faces multiple pressures: on one hand, from the continuous supply growth and inventory buildup in the U.S.; on the other hand, policy contradictions and expectation adjustments from OPEC+. In the short term, oil prices may remain in a volatile weak trend, with the market's focus on the subsequent recovery in demand and the adjustment of policies by oil-producing countries.

Risk Warning and Disclaimer

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

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