Washington: Oil prices edged higher on Tuesday after data showed a sharp drop in U.S. crude, gasoline, and distillate inventories, suggesting stronger demand or tightening supply. However, gains remained limited as traders weighed concerns about oversupply and the effectiveness of new U.S. sanctions on Russian oil companies.
According to the latest data for the week ending October 24, U.S. crude inventories fell by around 4 million barrels, while gasoline stocks dropped by about 6 million barrels and distillate stocks decreased by more than 4 million barrels. The drawdown in inventories provided temporary support for the market after a week of price declines.
Despite this positive signal, analysts said the overall outlook for oil remains mixed. Rising U.S. production and potential output increases from OPEC and its allies could add more supply to the market. Reports suggest OPEC+ may raise production by about 137,000 barrels per day in December, which could put downward pressure on prices.
The United States Energy Information Administration recently raised its forecast for domestic oil production to a record 13.53 million barrels per day for 2025, warning that the global market could face an oversupply if demand does not rise significantly. Meanwhile, Washington has announced plans to purchase one million barrels of oil to replenish its Strategic Petroleum Reserve, indicating efforts to maintain a balance between supply and national energy security.
Analysts also remain cautious about the impact of recent U.S. sanctions on Russian oil exports. Many traders doubt that the restrictions will significantly reduce global supply, as Russian producers may continue finding alternative buyers.
Market watchers say that while the fall in U.S. inventories gave oil prices a short-term boost, broader concerns about demand and output growth continue to weigh on sentiment. Unless consumption picks up strongly in major economies such as China and India, the market may struggle to sustain higher prices in the coming months.