Oil slipped as US diesel build clouds demand outlook

Oil prices fell on Wednesday as a rise in US diesel inventories revived concerns over demand, outweighing a sharp draw in crude stocks and fresh signals from the Federal Reserve.

Brent crude futures settled 52 cents lower, or 0.76%, at $67.95 a barrel. 

West Texas Intermediate declined 47 cents, or 0.73%, to $64.05.

US government data showed crude inventories dropped sharply last week on stronger exports and weaker imports. However, distillate stocks climbed, raising doubts about industrial and transport fuel consumption. Analysts noted that diesel remains the most vulnerable part of the barrel, amplifying market concerns.

The Federal Reserve cut interest rates by 25 basis points as expected and indicated further easing this year. While looser monetary policy could support growth, traders remain cautious about the near-term demand outlook.

Meanwhile, risks to Russian supply intensified as Ukrainian drone attacks continued to disrupt refineries and export infrastructure. Pipeline operator Transneft has warned producers they may be forced to curb output if damage to ports persists, according to industry sources.

Analysts said geopolitical risks could underpin prices, but fragile demand signals are likely to limit near-term gains, leaving the market under pressure.

Written: Aiman Haikal