1% drop in oil prices happens after the US builds up its crude stockpile and before Trump and Putin talk

U.S. crude output unexpectedly increased Wednesday, causing oil prices to drop more than 1%. However, losses were contained after the U.S. Treasury Secretary stated that President Donald Trump could use sanctions as leverage during a meeting with Russian President Vladimir Putin.

At 10:46 a.m. EDT, U.S. West Texas Intermediate crude futures slid 92 cents, or 1.5%, to $62.25 a barrel, while Brent crude futures declined 80 cents, or 1.2%, to $65.32 a barrel.

On Wednesday, the Energy Information Administration reported that U.S. crude stockpiles had increased by 3 million barrels to 426.7 million barrels. A 275,000-barrel draw was anticipated by analysts in a Reuters survey.

Last week, the EIA reported that net U.S. crude imports increased by 699,000 barrels per day.

John Kilduff, a partner at Again Capital in New York, stated that “these crude exports remain subpar from what we got used to, falling due to tariff pushback.” He also added that further declines in exports could have an impact for prices.

The International Energy Agency on Wednesday reduced its projection for consumption but increased its forecast for growth in oil supplies this year.

Putin and Trump are scheduled to meet in Alaska on Friday to talk about resolving Russia’s war in Ukraine, which has caused trouble for the oil markets since February 2022.

According to U.S. Treasury Secretary Scott Bessent, if the meeting is a failure, secondary tariffs or sanctions may be raised. He urged European leaders to use penalties as leverage as well.

In an interview with Bloomberg Television, Bessent stated, “He will make it clear to President Putin that all options are on the table.”

Meanwhile, OPEC+ pointed to a tighter market in its monthly report on Tuesday, reducing projections of supply growth from the United States and other producers outside the wider group and increasing its forecast for global oil demand for the upcoming year.

“Were we to take an aggregate of the respective IEA and OPEC oil demand growth projections for 2025 at their respective bearish and bullish ends, even a modest middle figure, say just north of 1 million bpd, can easily be serviced by non-OPEC supply growth alone at the moment,” said Gaurav Sharma, an independent energy analyst.

“So, I don’t see a bullish case for oil over the near-term horizon.”