Oil Prices Tumble as U.S. Inventories Build and Iran Deal Looms

Oil prices plummeted Thursday morning as both major benchmarks continued their downward trajectory amid mounting supply concerns.

Brent crude fell sharply to $63.77 per barrel, marking a 2.47% decline, while WTI crude dropped 2.54% to $60.82. The sell-off extends losses from Wednesday’s session when both benchmarks had already slipped by approximately 0.8%.

The Energy Information Administration reported a significant 3.454 million barrel increase in US crude stockpiles, reaching 441.8 million barrels for the week ending May 9.

This unexpected build shocked analysts who had projected a 1.1 million barrel draw. American Petroleum Institute data mirrored this bearish trend, showing an even larger 4.3 million barrel inventory increase.

Market sentiment deteriorated further as investors priced in the possibility of a US-Iran nuclear deal. Such an agreement would potentially bring substantial additional Iranian barrels to an already well-supplied market.

Traders remain cautious as negotiations progress, recognizing the geopolitical implications for global supply balances. OPEC+ continues its planned output increases despite adjusting its non-OPEC+ supply growth forecast downward to 800,000 barrels per day.

The organization previously estimated 900,000 barrels per day from these producers. This recalibration reflects diminished capital investment resulting from falling oil prices throughout early 2025.

The technical picture reinforces bearish sentiment. Both benchmarks trade well below their 50-day moving averages, with WTI breaking down from its recent consolidation pattern.

The daily charts display a clear downward channel since January 2025. Momentum indicators show accelerating selling pressure as prices approach critical support levels.

One bullish factor exists within the broader bearish landscape. Gasoline inventories decreased by 1.022 million barrels while distillate stocks fell significantly by 3.155 million barrels.

These product draws suggest healthy end-user demand ahead of the Northern Hemisphere’s summer driving season. US refineries operated at 90.2% capacity, indicating robust downstream activity.

Crude oil prices have now declined 14.30% since January 2025, with WTI futures trading near their lowest levels this year. Support levels around $60 for WTI and $63 for Brent now become critically important from a technical perspective.

Both benchmarks appear oversold on shorter timeframes, potentially setting up technical bounces. The market faces additional pressure as traders evaluate the impact of recent trade policy adjustments between major economies.

Economic momentum concerns persist despite temporary relief earlier this week from moderate inflation data. The confluence of inventory builds, production increases, and geopolitical developments creates substantial headwinds for oil prices heading into summer.

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