Oil prices fell on Wednesday after data showed that US crude inventories rose as traders continued to consider the conflict in the Middle East.

Brent crude oil, against which Nigerian oil is priced, shed $1.08, or 1.42 per cent to settle at $74.96 per barrel while the US West Texas Intermediate (WTI) crude oil dipped by 97 cents, or 1.35 per cent to $70.77.

The US Energy Information Administration (EIA) reported an inventory increase of 5.5 million barrels for the week to October 18.

The inventory change followed an American Petroleum Institute (API) estimate of a build totalling 1.64 million barrels for the reported period. It also compared with a draw of 2.2 million barrels for the previous week, as reported by the EIA last Thursday.

In petrol, the American authority estimated an inventory build of 900,000 barrels for the week to October 18, with production averaging 10 million barrels daily.

This compared with an inventory decline of 2.2 million barrels for the previous week when petrol production averaged 9.3 million barrels daily.

Market analysts noted that the crude inventory build is due to the recent hurricane in the US which curtailed production in the largest oil producer in the world.

Pressure also came as the US dollar index rose to its highest point in late July.

A strong US Dollar can hurt demand for oil, which is priced in the American currency, as it makes it more expensive for holders of other currencies.

The market also continued to monitor developments and concerns over potential oil supply risk from conflict in the Middle East.

On Wednesday, there was no tangible outcome from the US Secretary of State Antony Blinken’s latest visit to Israel.

Israel continues to pound both Gaza and Lebanon, and most recently it killed the next in line to the top spot at Hezbollah, Hashem Safieddine, sparking expectations of retaliation.

Mr Blinken pushed on Wednesday for a halt to fighting between Israel and militant groups Hamas and Hezbollah, but heavy air strikes carried out by Israel on a Lebanese port city Tyre showed that there is no calm in sight.

Market participants expect the conflict to go on longer and have taken advantage of the events unfolding to price longer.

Brent crude rose $1.75 or 2.4 percent to settle at $76.04 per barrel as traders ignored the possibility of a ceasefire in the tension-filled Middle East and jumped on signs that demand will improve in China, the world’s second largest economy.

Also, the US West Texas Intermediate (WTI) gained $1.53, or 2.2 percent to $72.09 a barrel.

This development means oil prices settled higher for the second consecutive session on Tuesday as traders banked on recent efforts by China to support its slowing economy.

This has led analysts to raise expectations for oil demand in the world’s largest crude importing nation.

Weak demand from China amid rapid electrification of its car fleets weighed heavily on oil prices in recent months.

Analysts at Goldman Sachs said their China demand tracker rose by about 100,000 barrels per day in the prior week to a six-month high, partly as the country’s industrial production and retail sales beat expectations.

Also, China set crude import quotas for next year at 257 million metric tons (equivalent to 5.14 million barrels per day), up from this year’s 243 million tons on Tuesday.

On the geopolitical front, the US Secretary of State, Mr Anthony Blinken met Israel’s Prime Minister, Mr Benjamin Netanyahu and pushed for a ceasefire in the Middle East after the country killed the leader of Hamas last week.

The US, which is an ally of Israel, hopes that this will provide an opportunity for peace in the region.

The US envoy’s visit marked the 12th visit but he has not been able to achieve the desired outcome so investors took this as a sign that nothing will change in the near term.

Also, Israel does not look like it will stop in Gaza and Lebanon just as Iran-back Hezbollah appears not to be relenting.

The market also overlooked the rise in crude oil inventories in the US which rose by 1.643 million barrels for the week ending October 18, according to the American Petroleum Institute (API). For the week before, the API reported a 1.58-million-barrel draw in crude inventories.

Official data from the US Energy Information Administration (EIA) is due later on Wednesday.

Oil prices traded 2 percent higher on Monday as the fight in the Middle East ragged on amid heightened Israel retaliation against attacks by Iran earlier this month.

Brent crude rose by $1.23 or 1.68 per cent to close at $74.29 per barrel while the US West Texas Intermediate (WTI) crude was $1.34 or 1.94 per cent higher at $70.56 a barrel.

On Monday Israel reportedly attacked hospitals and shelters for displaced people in the northern Gaza Strip as it continued its fight against Palestinian militants.

International media also reported that Israel carried out targeted strikes on sites belonging to Hezbollah’s funding arm in Lebanon.

Meanwhile, the US Secretary of State, Mr Antony Blinken said the Israel ally will push for a ceasefire as he embarks on a journey to the Middle East.

According to the US State Department, the American government will be seeking to kick-start negotiations to end the Gaza war and ensure it also defuses the possibility of escalation in Lebanon.

Mr Amos Hochstein, a US envoy, will hold talks with Lebanese officials in the Lebanon capital, Beirut on conditions for a ceasefire between Israel and Hezbollah.

Support also came from China, as the world’s largest oil importer cut its lending rate as part of efforts to stimulate the country’s economy and offer investors relief.

This development will soothe worries after data showed that China’s economy grew at the slowest pace since early 2023 in the third quarter, fuelling growing concerns about oil demand.

The head of the International Energy Agency (IEA), Mr Fatih Birol on Monday said China’s oil demand growth is expected to remain weak in 2025 despite recent stimulus measures from the government.

He said this is because the world’s second-largest economy has continued to accelerate its Electric Vehicles (EV) fleet and this is causing oil demand to grow at a slower pace.

Meanwhile, Saudi’s state oil company, Aramco remains fairly bullish in comparison as its Chief Executive Officer (CEO), Mr Amin Nasser said there is more demand for chemical projects on the sidelines of the Singapore International Energy Week conference.