Crude Oil Slides 3% on Inventory Build, Demand Worries

Crude oil fell more than 3% on Wednesday, with West Texas Intermediate settling at $68.12 a barrel. The move followed an EIA report showing U.S. crude stockpiles rose by 4.2 million barrels last week, roughly double the 2.1 million barrel increase analysts had forecast. Total inventories now sit at their highest level since June. Read our crude oil profile for more on the market structure.

Brent crude, the global benchmark, lost 2.8% to close at $72.45 a barrel.

Gasoline inventories also climbed, up 1.8 million barrels. Distillate stockpiles, which include diesel and heating oil, fell by 1.1 million barrels. Refinery utilization ticked up to 87.5% from 86.8% the prior week.

Traders said the data reinforced concerns that demand is softening heading into the spring driving season. U.S. gasoline demand over the past four weeks averaged 8.8 million barrels a day, down 2% from the same period last year. The seasonal pickup that typically supports prices this time of year has not materialized, a factor that helped push the market into its fourth decline in five sessions.

"The market is struggling to find a bid with inventories this high and demand showing signs of weakness," said John Kilduff, partner at Again Capital in New York. "The seasonal demand pickup that typically supports prices this time of year hasn't materialized."

The selloff accelerated in afternoon trading alongside broader equity market declines. The S&P 500 fell 0.7%, with technology stocks leading the decline. The Nasdaq Composite dropped 1.2%.

Oil prices had rallied earlier in the month after OPEC+ announced an extension of production cuts through the second quarter. The cartel and its allies agreed to keep 2.2 million barrels a day of output offline. That move has failed to stem the slide in prices, with the combination of steady domestic output and rising stockpiles keeping the market well supplied.

U.S. production held at 13.1 million barrels a day, near record levels.

The EIA also reported that crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.5 million barrels last week.

Traders are now watching for signs of demand pickup as the summer driving season approaches. The next major data point comes Thursday with the release of weekly jobless claims, which could offer clues on the broader economic outlook.

Kilduff said the market needs a catalyst beyond OPEC+ cuts. "The supply side is doing its part. The demand side needs to show up."