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Investing.com – Oil tumbled almost 5% Wednesday, with U.S. crude breaking beneath the key $60 support and Brent briefly falling under $65, as President Donald Trump refrained from further military hostilities with Iran after Tehran attacked U.S. airbases.

The muted Iranian retaliation to the U.S. killing of its top general Qassem Soleimani last week and Trump’s commensurate reaction on Wednesday, along with a surge in U.S. oil stockpiles in weekly data released by the government, put paid to the market’s strong rally into the New Year.

, the U.S. crude benchmark, settled down $3.09, or 5%, at $59.61. It was WTI’s first slump beneath $60 since mid-December. Just earlier on Wednesday, it hit an April 2019 high of $65.65 as news of the Iran attack on two U.S.-Iraqi airbases sent oil rallying in Asian trading hours.

, the global benchmark for crude, lost $2.47, or 3.6%, by 3:30 PM ET (20:30 GMT) to trade at $65.80. It fell to $64.94 earlier, cracking the $65 support. Brent had peaked at $71.28 on Wednesday on news of the Iran missile attacks.

Trump, speaking after the Iranian attack, said the United States will hit Iran with heavier sanctions. But he did not speak of a counterattack. He also offered Tehran chances for talks if it “changed its behavior,” a further sign of diplomacy.

“It is a sigh of relief that, at least for now, petroleum is out of the crosshairs” of the U.S.-Iran conflict, said Phil Flynn, analyst at the Price Futures Group in Chicago.

With the political risk picture evaporating, the market turned its full attention back to fundamentals and the weekly U.S. oil inventory report from the Energy Information Administration.

U.S. rose by 1.2 million barrels for the week ended Jan. 3, the EIA said. The market was looking for a decline of 3.6 million barrels, according to analyst forecasts compiled by Investing.com.

soared by 9.1 million barrels, compared with expectations for a rise of 2.7 million barrels. climbed by 5.3 million barrels, versus forecasts for a build of 3.9 million barrels.

“For a second week in a row, we’re having a humongous build in fuel products and this market can no longer ignore,” Investing.com’s senior commodities analyst Barani Krishnan said. “The latest dataset shows a build of nearly 14.5 million barrels in gasoline and distillates combined and that’s coming on the back of last week’s data showing an 11-million-barrel build.”

“Clearly, refineries are cranking out as much products as they can in anticipation of demand that hasn’t kicked in,” Krishnan said, adding that the lack of geopolitical tensions will drive the market further down now.

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