Oil Prices Settle Lower Amid U.S. Stockpile Build

Oil prices declined on Wednesday, with Brent futures down 1.2% at $79.76 per barrel and West Texas Intermediate falling 1.8% to $76.98 per barrel.

US Inventories Unexpected Rise to Dent Demand Optimism

Data from the Energy Information Administration indicated that U.S. oil inventories increased by 1.4 million barrels for the week ending August 9, contrary to expectations of a decline of 1 million barrels. Despite this unexpected rise, refinery activity averaged 16.5 million barrels per day, which is up by about 65,000 bpd from the previous week. Gasoline inventories fell by 2.9 million barrels, while distillate inventories decreased by 1.7 million barrels, both more significant than expected declines. This report follows the Organization of Petroleum Exporting Countries and the International Energy Agency’s reduction of their 2024 demand forecasts this week.

Rate Cut Bets Build After US CPI

U.S. consumer prices rose less than anticipated on an annual basis in July, increasing the likelihood of interest rate cuts by the Federal Reserve at its upcoming September meeting. The Labor Department’s consumer price index (CPI) rose by 2.9% in July, down from 3.0% in June. The core CPI, excluding volatile items like food and fuel, climbed by 3.2%, below projections of 3.3%. This follows a cooler-than-expected producer price index report, confirming a generally benign inflation environment. Such conditions could lead the U.S. central bank to reduce its policy rate, which has been held at 5.25%-5.50% for over a year. Traders now lean slightly more towards a 50 basis point cut in September rather than a 25 bps cut.

*(Peter Nurse, Ambar Warrick contributed to this item.)