Crude Oil Market Wavers as Traders Assess US Stockpile Surge and Strait Negotiations

Crude oil prices traded in a volatile range during the session, with little apparent progress in talks between Iran and the United States regarding the Strait of Hormuz, while traders digested a flurry of data from key energy forecasters.

WTI crude settled nearly flat near $83 per barrel, following a four-day rally that saw a cumulative gain of 10%. Futures prices remained sensitive to headlines concerning the reopening of this critical waterway, oscillating between optimism over a potential deal and signs of stalled negotiations.

US President Donald Trump asserted that the United States has "complete control" over the Strait of Hormuz, as both Washington and Tehran adopted more hardened stances. Meanwhile, Pakistan indicated that the timeline for a US-Iran memorandum of understanding could be extended.

Oil prices briefly touched their intraday low after the US Energy Information Administration reported a weekly crude inventory build of 17.4 million barrels, nearly double the increase estimated by a widely-followed industry group. This was the largest inventory build in over three years, as US crude imports rose to their highest level since November 2024.

In other product markets, US diesel exports surged to a record high, approaching 2 million barrels per day, which in turn lifted diesel futures. Data from the American Automobile Association showed that tight supply in the refined products market has pushed both gasoline and diesel prices to their highest levels for this time of year.

"Continued weakness in crude exports, combined with a substantial jump in imports, has driven the second-largest historical build in crude inventories, with the vast majority of the increase occurring along the Gulf Coast," said Matt Smith, an analyst at market intelligence firm Kpler.

The massive crude inventory build did not fully dispel market concerns about whether US oil supply could compensate for a severe supply disruption resulting from a conflict with Iran. Data from the International Energy Agency released on Wednesday showed the market is facing an estimated supply deficit of 1.8 million barrels per day.

In New York, WTI crude for September delivery rose 7 cents to settle at $83.27 per barrel.

Brent crude for October delivery edged up 7 cents to close at $88.98 per barrel.