08:51 AM EST, 02/26/2025 (MT Newswires) -- Oil edged lower early on Wednesday as the prospect of rising supply offset a report showing a surprise drop in U.S. inventories last week.

West Texas Intermediate crude oil for April delivery was last seen down US$0.12 to US$68.81 per barrel, the lowest since Dec.10, while April Brent crude was down $0.17 to US$72.85.

In its weekly survey, the American Petroleum Institute said U.S. oil inventories fell by 640,000 barrels last week, while the consensus estimate of analysts polled by Reuters expected a rise of 2.6-million barrels. The Energy Information Administration will report official inventory data later on Wednesday morning and the two reports are often widely divergent.

The inventory drop is playing against the threat of rising supply amid slowing demand growth. OPEC+ still expects to return 2.2-million barrels per day of production cuts in 18 monthly tranches beginning in Apri, Supply from Canada, the United States and South America is also climbing, while demand growth in China, the No.1 importer, sputters along with its economy.

The threat of a global trade war is also dampening the economic outlook after U.S. President Donald Trump imposed a 10% tariff on imports from China and is promising to impose tariffs of 25% on goods from Canada and Mexico, the two largest U.S. trade partners, next week.

"T-Day, as coined by market observers, is creeping up in the diary. The tariffs are due to be implemented on March 4th and just to stir the pot, Mr Trump said tariffs are on time and are going forward. Investors do not know what to believe and are made even more uncomfortable by the US imposing tighter microchip controls on China and stopping allies such as Japan and the Netherlands from undertaking further technology exports bound there," PVM Oil Associates noted.