On Wednesday, oil futures experienced a decline primarily attributed to a significant increase in US crude inventories. However, the impact on prices was mitigated by positive projections for robust demand growth from the Organization of the Petroleum Exporting Countries (OPEC).

Around 1602 GMT, Brent crude futures saw a modest drop of 4 cents, settling at $82.73 per barrel. Simultaneously, US West Texas Intermediate (WTI) crude futures experienced a marginal decrease of 12 cents, equivalent to 0.2%, reaching $77.75.

The Energy Information Administration (EIA) revealed a remarkable surge in U.S. crude inventories, increasing by 12 million barrels to reach 439.5 million barrels in the past week. This notable increase exceeded analysts' expectations, who had anticipated a more conservative 2.6 million-barrel rise. The unexpected surge in inventories was attributed to a slowdown in refinery activity.

Despite the bearish sentiment due to the surge in inventories, the oil market found support from OPEC's monthly report. OPEC projected a rise in global oil demand by 2.25 million barrels per day (bpd) in 2024 and an additional 1.85 million bpd in 2025. Both forecasts remained unchanged from the previous month's report. Additionally, the meeting between Iraqi Prime Minister Mohammed Shia al-Sudani and Saudi Energy Minister Prince Abdulaziz bin Salman emphasized the importance of coordination between the two nations to maintain stability in oil markets.

The unexpected surge in US crude inventories, reported by the EIA, set the tone for the day's market dynamics. Analysts had anticipated a more modest rise, making the actual increase of 12 million barrels a significant deviation from expectations. The slowdown in refinery activity, as highlighted by Mizuho's Bob Yawger, underscored challenges in the refining sector, contributing to the notable build-up in crude inventories.

While concerns over the refinery utilization rate and declining crude runs influenced bearish sentiments, OPEC's monthly report injected an element of optimism into the market. The organization's projections for global oil demand growth in 2024 and 2025 provided a counterbalance to the inventory-related concerns. The unchanged forecasts from the previous month signalled stability and confidence in OPEC's assessments, potentially mitigating some of the negative sentiment.

Geopolitical factors played a significant role in shaping market sentiment. Ongoing conflicts in the Middle East and the Russia-Ukraine tensions added an additional layer of uncertainty. The meeting between Iraqi Prime Minister Mohammed Shia al-Sudani and Saudi Energy Minister Prince Abdulaziz bin Salman highlighted the ongoing importance of international cooperation to ensure stability in oil markets.

In the context of the broader economic landscape, the growing perspective that US interest rate cuts might be delayed beyond previous expectations became a notable factor influencing oil prices. The intricate balance between macroeconomic considerations and geopolitical tensions added complexity to the decision-making process for investors and market participants.