Yahoo Finance Oil prices settle lower after surprise US inventory build
Investing.com-- Oil prices settled lower Wednesday for the third-straight day as an unexpected build in U.S. inventories cast doubt over demand in the world's largest crude consumer.
At 14:30 ET (18:30 GMT), Brent oil futures sank 1.2% to $81.90 a barrel, while West Texas Intermediate crude futures fell 1.4% to $77.57 a barrel.
US inventories see unexpected build
Data from the Energy Information Agency showed Wednesday that U.S. oil inventories grew by 1.8 million barrels last week, confounding expectations for a 2.4M barrel decline. That raised some concerns over sluggish U.S. oil demand, with the upcoming Memorial Day holiday marking the traditional start of the travel-heavy summer season.
The unexpected build in inventories raised some concerns over sluggish U.S. oil demand, especially ahead of the upcoming Memorial Day holiday, which traditionally marks the beginning of the summer driving season. with regards to fuel consumption.
Gasoline inventories, one of the products that crude is refined into, declined by about 945,000 barrels against expectations of a draw of 1.6M barrels while distillate stockpiles unexpectedly rose by 379,000 barrels, compared to expectations for a fall of 100,000 barrels.
Traders were fearful that pressure from sticky inflation and high interest rates would limit the growth in demand over the coming months, with gasoline stockpiles also growing by 2.1 million barrels.
The API data usually heralds a similar reading from official inventory data, which is due later on Wednesday.
Fed minutes flag inflation jitters
Also weighing on sentiment were concerns that the Federal Reserve might keep U.S. interest rates higher for longer after the minutes of the Federal Reserve’s Apr. 31-May. 1 meeting released Wednesday, showed Fed members were concerned about stalling disinflation.
Participants noted "recent data had not increased their confidence in progress toward 2 percent and, accordingly, had suggested that the disinflation process would likely take longer than previously thought," the minutes showed.
Stalling disinflation may likely discourage Federal Reserve's members from backing sooner rat©´cuts.
OPEC+ meeting draws near
Beyond the Fed, the focus is also on a meeting of the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+ in early-June.
The group of major producers are currently making voluntary output cuts totalling about 2.2 million barrels per day for the first half of 2024, led by Saudi Arabia rolling over an earlier voluntary cut.
Traders are looking for any signs that the cartel will extend its current run of production cuts.
“Oil inventories falling by less than we had expected in recent weeks and U.S. interest rates staying higher for longer are likely to have an impact on OPEC+’s policy of being proactive, preemptive, and precautionary,” said analysts at UBS, in a note earlier this month.
“We now expect the eight member states with voluntary production cuts to extend them by at least three months ahead of the ordinary meeting at the beginning of June.”
(Peter Nurse, Ambar Warrick contributed to this article.)
Related Articles
Oil prices settle lower after surprise US inventory build
Second US dairy worker infected with bird flu confirmed in Michigan
Oil slips for a third straight day on prospect of US rates staying high
