Oil Prices Fall Over 1% as U.S. Fuel Inventories Surge and Demand Outlook Weakens
Written by SpringnewsNG Media Limite
June 5, 2025 — Crude oil prices declined by more than 1% on Wednesday after the latest U.S. government data revealed a significant build in gasoline and diesel inventories, signaling softening demand despite upcoming OPEC+ production increases and ongoing geopolitical uncertainty.
According to the U.S. Energy Information Administration (EIA), gasoline stockpiles surged by 5.2 million barrels, far exceeding analysts’ forecasts of a modest 600,000-barrel rise. Distillate inventories, which include diesel and heating oil, rose by 4.2 million barrels, also surpassing expectations of a 1-million-barrel increase. Meanwhile, U.S. crude oil inventories fell by 4.3 million barrels, a sharper drawdown than the projected 1-million-barrel drop.
The surge in refined product inventories led to bearish sentiment in the market, with Brent crude futures closing down 77 cents (1.2%) at $64.86 per barrel, and U.S. West Texas Intermediate (WTI) crude settling 56 cents (0.9%) lower at $62.85 per barrel.
“The report is bearish in my view due to large builds in refined products,” said Giovanni Staunovo, a commodities analyst at UBS. “While crude demand rose, likely due to stronger refinery activity, the post-Memorial Day jump in fuel production combined with weaker implied demand caused inventory levels to balloon.”
Adding pressure to oil markets are plans by OPEC+ to boost crude production by 411,000 barrels per day (bpd) in July. This increase, amid already high fuel inventories, has raised concerns among investors about potential oversupply.
The price dip came just one day after oil benchmarks had rallied nearly 2% to two-week highs, driven by concerns over supply disruptions and speculation that Iran might reject a U.S. nuclear deal, keeping sanctions in place and limiting global oil supply.
However, broader macroeconomic signals also weighed on the energy outlook. The Organisation for Economic Co-operation and Development (OECD) recently lowered its global economic growth forecast, citing the mounting impact of U.S. trade policies under President Donald Trump. Analysts say this slowdown could dampen future oil demand.
Meanwhile, diplomatic tensions persist. President Trump is expected to speak with Chinese President Xi Jinping this week, just days after accusing China of backtracking on key trade commitments. Any escalation in the U.S.-China trade dispute could further cloud the global economic and energy demand outlook.
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