Oil Prices Dip as India Diversifies Supply, US Inventories Fall

Oil prices fell in early trading Thursday, with West Texas Intermediate (WTI) crude down 1.3 percent to $88.86 per barrel. The global benchmark, Brent crude, declined 1.46 percent to $91.74, according to live price data. Bakken crude was trading at a discount of $3.42 below WTI.

The price decline comes despite a significant drawdown in U.S. commercial crude inventories. According to Rigzone, the U.S. Energy Information Administration's latest weekly report showed commercial crude oil stocks, excluding the Strategic Petroleum Reserve, fell to 426.5 million barrels for the week ending June 5. This represents a draw of over 7 million barrels from the previous week.

Offsetting the supportive inventory data, market sources pointed to efforts by major importers to secure supply from outside traditional conflict zones. OilPrice.com reported that Indian refiners have secured crude supply at least through August by boosting purchases from the United Arab Emirates (UAE), Africa, and Brazil. India, the world's third-largest crude importer, has accelerated efforts to diversify its imports following the Middle East crisis, increasing volumes from West Africa and South America.

However, the overall global supply picture remains constrained by ongoing conflict. Rigzone cited a Rystad Energy analysis indicating that cumulative oil supply losses due to war have now reached one billion barrels. "Cumulative losses have now reached one billion barrels and are on track to nearly double by year-end under our base case," said Rystad Energy MENA Research Director Aditya Saraswat.

For Bakken operators, the price environment remains profitable with WTI holding near $89, though the regional differential of -$3.42 means Bakken crude is priced closer to $85.44. The steady, high-volume demand from large importers like India, even as they diversify sources, provides underlying market support. The substantial draw in U.S. inventories suggests robust domestic demand or lower import levels, which can help balance the market against new supply sources entering global trade.

Natural gas prices also saw a slight decline, trading at $3.12 per MMBtu. The combined market signals point to a complex landscape where near-term price pressure from new supply arrangements competes with longer-term structural supply deficits caused by persistent geopolitical disruptions.