09:01 AM EDT, 09/25/2024 (MT Newswires) -- Oil prices retreated early on Wednesday, giving up some day-prior gains that came as China took steps to stimulate its economy while the second Gulf of Mexico storm in two weeks cuts into supply and a report showed a larger than expected drop in U.S. inventories.

West Texas Intermediate crude oil for November delivery was last seen down US$1.39 to US$70.17 per barrel, while November Brent crude, the global benchmark, was down US$1.35 to US$73.82.

In its weekly survey, the American Petroleum Institute reported U.S oil inventories fell by 4.34-million barrels last week, more than the consensus estimate for a drop of 1.1-million barrels, according to Oilprice.com. The Energy Information Administration will release official inventory data later on Wednesday.

The drop in stocks came as Hurricane Francine earlier this month cut production from the Gulf of Mexico. Another storm, dubbed Helene, is now off the coast of Mexico's Yucatan peninsula and is expected to reach hurricane strength later on Wednesday ahead of landfall in northern Florida on Thursday, according to the National Hurricane Center.

Gulf producers have begun evacuating platforms ahead of Helene's arrival, again cutting into supply. The Bureau of Safety and Environmental Enforcement, the U.S. offshore regulator, on Tuesday said 284,000 barrels per day had so far been shut in, 16% of gulf output.

China's central bank on Tuesday took steps to stimulate its ailing economy, cutting interest rates and lowering down payments on home purchases as its real-estate sector suffers a debt crisis and consumer spending is weak. While the measures were welcomed, there are questions over whether the steps were enough to boost the economy of the No.1 oil importer.

"Crude has so failed to gain a foothold above key levels, in WTI around USD 72 and USD 75 in Brent, despite Middle East tensions, API reporting a drop in US crude stockpiles to a two-year low, and China stimulus as it is not clear whether the measures will translate into higher energy demand," Saxo Bank noted.