Oil slips as US crude stocks swell, Saudi pipeline outage clouds supply outlook

Oil prices declined on Wednesday after an unexpected increase in U.S. crude inventories, even as supply concerns lingered following Saudi Arabia's suspension of loadings at its Yanbu port.

Brent crude futures were down 93 cents, or 0.86%, at $107.82 a barrel by 0028 GMT, while U.S. West Texas Intermediate futures fell 97 cents, or 0.92%, to $104.86 a barrel. Both benchmarks had settled more than $3 higher on Tuesday, touching their highest levels since May 19, as the Yanbu suspension and reduced Saudi shipments to Europe tightened the market's mood.

Citing data from the American Petroleum Institute, market sources said U.S. crude, gasoline and distillate inventories all rose last week. Crude stocks increased by 7.1 million barrels in the week ended September 11, against analysts' expectations of a draw of about 1.6 million barrels. While the builds in gasoline and diesel weighed on prices, Haitong Futures noted in a report that regional stock increases do not alter the underlying tightness in the global crude market.

Loadings at Yanbu were suspended after Saudi Arabia shut its East-West pipeline following an attack by Yemen's Iran-aligned Houthis on Friday. The conduit has been used to reroute about 4 million barrels per day, or roughly 4% of global supply, to the Red Sea port. The U.S. energy secretary said crude should resume flowing through the pipeline within days, but sources offered differing timelines, with one saying repairs could take five to six weeks and another suggesting partial pumping could restart sooner.

Separately, Libya's National Oil Corporation said operations at three oil fields were suspended after protesting members of the Petroleum Facilities Guard shut a valve on the Hamada-Zawiya crude export pipeline. NOC Chairman Massoud Suleman said Libyan production has not been significantly affected and remains at about 1.4 million barrels per day.