08:46 AM EDT, 07/31/2025 (MT Newswires) -- Oil traded lower early on Thursday, falling off a five-week high after an unexpected rise in U.S oil inventories and despite fresh sanction threats on Russian supply from the Trump Administration.

West Texas Intermediate crude for September delivery was last seen down US$0.32 to US$69.68 per barrel, falling off the highest since June 20, while September Brent oil was down US$0.40 to US$72.84.

The drop comes after the Energy Information Administration on Wednesday reported U.S. commercial oil inventories rose by 7.7-million barrels last week, while the consensus estimate among analysts polled by Reuters expected a drop of 1.3-million barrels.

"Commercial crude inventories soared +7.7mmbbls last week, with stocks now tracking -1% y/y and -6% below the 5y average. The build was supported by crude exports plunging -1,157mbpd coupled with crude imports climbing +159mbpd," Tudor, Pickering, Holt analyst Jenny Ryu noted.

Threats from U.S President to impose secondary sanctions on India for buying Russian oil as he imposed a 25% tariff on goods from the country are offering some support to the commodity even as the market is over-supplied.

With Western hemisphere production also increasing, OPEC+ is returning 2.2-million barrels per day of production cuts to market in monthly tranches that began in May, with the full return expected to be complete in September.