Oil fell on Wednesday after the release of the Energy Information Administration (EIA) weekly crude inventories report showed a larger drawdown than anticipated at 3.1 million barrels of crude, a surprise buildup of 3.6 million barrels of gasoline and a larger than expected buildup of distillates at 5.7 million barrels.
While a crude drawdown was expected the rise of distillates and gasoline moved the needle lower for oil prices as fears of oversupply remain.
Weather related supply disruptions in the Gulf of Mexico affected around 70 percent of production in the area, but it will slowly get back online, but could lead to lower stock data in the next weekly report.
Easing of tensions between the US and Iran, mixed Chinese growth data and storm hit operations getting back online are all pressuring oil prices downward.
Oil prices were lower on Tuesday as Middle East tensions eased after comments from US Secretary of Sate Mike Pompeo about Iran’s willingness to negotiate.
Previously Iran had a more aggressive stance, but after President Hassan Rouhani said on Sunday that Iran is ready to hold talks if sanctions were lifted, a diplomatic avenue thought to be exhausted came back into play although it did so at the same time of the threat of higher uranium enrichment. Tensions could still flare up as Iran denies it is ready to negotiate on its missile program.
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