Oil dropped more than 1% on Wednesday as traders looked for signs of Middle East tensions easing and new data showed that US stockpiles surged.

West Texas Intermediate (CL=F) dropped to settle at $70.77, while Brent (BZ=F), the international benchmark price to close at $74.96 a barrel.

The latest government data showed crude inventories increased by 5.5 million barrels last week, versus analysts' expectations of an increase of 1 million barrels, per Bloomberg data.

Gasoline inventories grew by 900,000 barrels from the previous week, compared to projections for a decline of 1.9 million barrels.

Data from the American Petroleum Institute (API), an industry group, also showed a bigger-than-expected rise in stockpiles.

The drop in oil prices comes after a 4% rise over the prior two sessions as traders watched the Middle East crisis, with escalating conflicts in Gaza and Lebanon. On Tuesday, US Secretary of State Antony Blinken arrived in Israel to meet with Prime Minister Benjamin Netanyahu in an effort to reignite ceasefire talks.

The lack of recent headlines over Israel’s retaliatory plans against Iran following an Oct. 1 missile attack has also weighed on prices.

“Crude futures are under pressure as no news from Israel is taken as negative news to oil prices, in that any counterattack may be delayed until after the US elections," Dennis Kissler, senior vice president at BOK Financial, said on Wednesday.

A rising US Dollar Index is also bearish for oil prices since the commodity is invoiced in US currency.

Brent touched $80 per barrel earlier this month on speculation that Israel would attack Iran's oil infrastructure, a concern that has recently eased.

"As concerns about Iran oil supply have eased, market focus is shifting back to the risks of oversupply in 2025," Goldman Sachs analysts said in a note on Tuesday.

The firm predicts Brent will trade in the $70 to $85 per barrel range with an average price of $77 in the fourth quarter of 2024 and $76 next year.

The Organization of the Petroleum Exporting Countries and its allies are expected to start unwinding output cuts in December, a move the oil alliance has previously postponed.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance