Brent declines following huge build in US crude stocks

The front-month ICE Brent contract has lost by $1.84/bbl on the day, to trade at $87.37/bbl at 09.00 GMT.

IMAGE: Crude oil flowing out of a barrel. Getty Images

Upward pressure:

Brent’s price has continued to trade above $85/bbl mark as rising hostilities in the Middle East keeps the market on edge.

Iran said the Strait of Hormuz will remain closed unless Washington agrees to the six demands, including a total cessation of all US military action in the region and the immediate withdrawal of all US forces from the region.

In response, US President Donald Trump demanded that Iran pay “compensation” to Washington for war-related damages.

“There was little in the way of fresh developments between the US and Iran, with both sides remaining in a deadlock,” two analysts from ING Bank noted.

Downward pressure:

Brent’s price has declined after the US Energy Information Administration (EIA) reported a significant build in crude stocks.

Commercial US crude oil inventories increased by a massive 17.4 million bbls to 424.4 million bbls in the week ending 7 August, according to data from the EIA.

“The EIA’s weekly report was fairly bearish,” ING Bank’s analysts said, adding this is the largest weekly increase since January 2023.

The American Petroleum Institute (API) also reported a sizeable inventory gain of 9.07 million bbls during the same week.

A build in US crude stocks typically indicates lower demand for oil and can put some downward pressure on Brent's price.

By Aparupa Mazumder

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