Investing.com -- Oil prices settled lower Wednesday after giving up gains as a huge increase in U.S. weekly crude stockpiles and record high domestic production overshadowed a fresh escalation in Middle East tensions.
At 14:40 ET (19:30 GMT), West Texas Intermediate crude futures settled 1.6% lower to $76.64 per barrel, while Brent oil futures expiring in April fell 1.4% to $81.60 a barrel. Oil prices had been up 1% earlier in the day.
US weekly crude stockpiles jump as output remains at record level
Inventories of U.S. crude rose by roughly 12 million barrels in the week ended Feb. 9, well above expectations for a build of about only 3.3M (NYSE:MMM) barrels as U.S. production climbed to a record high of 13.31M barrels per day.
The larger than expected build in crude oil comes as U.S. refinery utilization dropped to 80.6% from 82.4% last week.
Gasoline inventories, one of the products that crude is refined into, fell by about 3.7M barrels against expectations of a draw of only 1.2 million barrels while distillate stockpiles fell by 1.9M barrels, compared to expectations for a fall of 1.6M barrels.
Middle East tensions rise as amid Israel strikes in Lebanon
Middle East tensions, which have propped up oil prices amid fears of supply disruptions in the oil-rich region, were ratcheted up after Israel launched airstrikes in Lebanon in retaliation to a rockets fired into Northern Israel.
Hopes of a Israel-Hamas ceasefire, meanwhile, were dealt a blow after Israeli prime minister Benjamin Netanyahu called for a "powerful" operations in Rafa, defying calls from the international community to proceed carefully.
(Amber Warrick continued to this report.)