Investing.com — Oil prices fell for a third straight day on Wednesday after an unexpected surge in U.S. inventories cast doubt on demand from the world’s biggest crude consumer.
At 2:30 PM ET (18:30 GMT), the price was down 1.2% at $81.90 per barrel, while down 1.4% to $77.57 per barrel.
American inventories are unexpectedly building up
Data from the US oil exchange showed on Wednesday that US oil inventories grew by 1.8 million barrels last week, clouding expectations for a decline of 2.4 million barrels. That led to some concern about sluggish oil demand in the US, with the upcoming Memorial Day holiday marking the traditional start to the summer travel season.
The unexpected increase in inventories raised some concerns about sluggish oil demand in the U.S., especially ahead of the upcoming Memorial Day holiday, which traditionally marks the start of the summer driving season. in terms of fuel consumption.
Gasoline, one of the products that crude oil is refined into, fell about 945,000 barrels against expectations for a decline of 1.6 million barrels, while distillate inventories rose 379,000 barrels compared to expectations for a decline of 100,000 barrels .
Traders feared pressure from persistent inflation and high interest rates would limit demand growth in coming months, with gasoline inventories also expected to rise by 2.1 million barrels.
The API data usually announces a similar reading of , due later on Wednesday.
Fed minutes create inflation jitters
Concerns that the Federal Reserve could keep US interest rates high for longer following the April 30, 2011 Federal Reserve minutes also weighed on sentiment. The first meeting released Wednesday showed Fed members concerned about stagnant disinflation.
Participants noted that “recent data had not increased their confidence in progress to 2 percent and had therefore suggested that the disinflation process was likely to take longer than previously thought,” the minutes showed.
Stagnant disinflation could likely deter Federal Reserve members from supporting faster rate cuts.
OPEC+ meeting approaching
In addition to the Fed, the focus is also on a meeting of the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, in early June.
The group of major producers is currently implementing voluntary production cuts totaling around 2.2 million barrels per day for the first half of 2024, with Saudi Arabia reversing an earlier voluntary cut.
Traders are looking for signs that the cartel will continue current production cuts.
“Oil inventories falling less than we expected in recent weeks and US interest rates remaining higher for longer are likely to impact OPEC+’s policy of being proactive, preventive and precautionary,” UBS analysts said in an earlier published note. month.
“We now expect that the eight member states with voluntary production cuts will extend them for at least three months before the regular meeting in early June.”
(Peter Nurse, Ambar Warrick contributed to this article.)
