Oil Prices Drop Sharply Despite Large Inventory Draw

Oil prices fell sharply in midday trading Wednesday despite a significant drawdown in U.S. crude inventories. West Texas Intermediate (WTI) crude was trading at $98.67 per barrel, down $5.48 or 5.26 percent. Brent crude was at $105.18, down $6.10 or 5.48 percent. The Bakken differential was $-3.42 versus WTI.

The price drop coincided with the release of weekly inventory data from the U.S. Energy Information Administration (EIA). According to OilPrice.com, commercial crude inventories decreased by 7.9 million barrels for the week ending May 15, bringing stockpiles to 445.0 million barrels, which is now 2 percent below the five-year average. The report noted that total products supplied, a proxy for demand, rose to an average of 20.2 million barrels per day over the last four weeks, up 3.1 percent year-over-year.

The price decline appears driven by geopolitical factors rather than fundamentals. OilPrice.com reported that crude prices saw relief Wednesday following a statement by U.S. President Donald Trump indicating the U.S. would end a war "very quickly." Rigzone also reported that oil settled lower Tuesday as traders weighed renewed U.S. threats against Iran, suggesting volatile trade continues to be influenced by geopolitical headlines.

For Bakken operators, the midday price represents a significant retreat from recent levels, though the local differential remains relatively narrow at under $3.50 below WTI. The strong inventory draw and demand figures reported by the EIA indicate underlying market strength, which may provide support if geopolitical pressures subside.

In related energy markets, natural gas was trading at $3.02, down $0.09. Rigzone reported that the U.S. Energy Information Administration lowered its Henry Hub spot price forecasts for 2026 and 2027 in its latest Short-Term Energy Outlook.

The EIA's weekly report also detailed a 1.5-million-barrel decrease in gasoline inventories. Distillate inventories increased by 400,000 barrels but remain 9 percent below the five-year average.