Crude oil futures added to their losses in the middle of the trading week, despite a larger-than-expected decline in US inventories. Oil prices have been slumping as the likelihood of a wider conflict in the Middle East diminishes. Still, the global energy market will likely face tightness in the year’s second half that could support prices.

September West Texas Intermediate (WTI) crude oil futures tumbled $1.00, or 1.37%, to $72.17 per barrel at 14:46 GMT on Wednesday on the New York Mercantile Exchange. US crude has plunged more than 6% this month and has erased most of its year-to-date gains. So far, in 2024, the US benchmark is up just 1%.

Brent, the international benchmark for oil prices, fell below $77. October Brent crude futures dropped $0.95, or 1.23%, to $76.25 a barrel on London’s ICE Futures exchange. Brent is down 1% year-to-date.

According to the US Energy Information Administration (EIA), domestic inventories of crude oil soared by 4.649 million barrels for the week ending August 16, down from the previous week’s build of 1.357 million barrels. The market had forecast a drawdown of 2.72 million barrels.

There have been supply drawdowns in seven of the last eight weeks.

Gasoline supplies tumbled by 1.606 million barrels, heating oil stockpiles rose 265,000 barrels, and distillate inventories plummeted by 3.312 million barrels.

Even after a bullish storage report, investors shrugged it off on the softening of geopolitical concerns in the Middle East. Regional partners could be on the brink of a cease-fire agreement.

Additionally, there are demand woes persistent throughout the global energy market. China’s economy has continued to cool off, while the latest US job revisions might revive growth fears.

“The sting in the scorpion’s tail that hurts worse than anything is that this data helped create a crisis of confidence,” said Tim Snyder, chief economist at Matador Economics, to CNBC. “We are measuring everything right now by the Chinese economy and if anything is leaning negative out of China, it is going to pressure energy.”

In other energy commodities, September natural gas futures fell $0.016, or 0.73%, to $2.182 per million British thermal units (Btu). September gasoline futures shed $0.0521, or 2.31%, to $2.2049 a gallon. September heating oil futures slipped $0.0135, or 0.59%, to $2.2662 per gallon.