Investing.com — Oil prices pared gains to offset lower Wednesday after a surprise increase in U.S. inventories, pointing to an easing of summer travel, sapped demand.
At 2:30 PM ET (18:30 GMT), the price was down 1.2% at $79.76 per barrel, while down 1.8% to settle at $76.98 per barrel.
The unexpected increase in US inventories leads to a decline in optimism about demand
Data from US oil inventories shown rose by 1.4 million barrels in the week to August 9, clouding expectations for a decline of 1.4 million barrels.
The unexpected increase comes as refinery activity picked up an average of 16.5 million barrels per day in the week ending August 9, about 65,000 barrels per day more than the previous week’s average.
inventories fell by 2.9 million, while inventories fell by 1.7 million barrels, compared with estimates for a decline of 1.1 million and 1.8 million barrels.
The reading comes after the Organization of the Petroleum Exporting Countries and the International Energy Agency this week cut their 2024 demand.
Rate cut bets are built after the US CPI
U.S. consumer prices rose less than expected on an annual basis in July, data released earlier Wednesday showed, raising the likelihood that the Federal Reserve will cut interest rates at its next meeting in September.
The Labor Department’s CPI rose 2.9% last month, a slight slowdown from 3.0% in June. Excluding more volatile items such as food and fuel, the ‘core’ figure rose 3.2% in the 12 months to July, below projections of 3.3%.
This release followed Tuesday’s cooler-than-expected July and confirms generally mild inflationary pressures, which could allow the US central bank to cut its key interest rate from the 5.25%-5.50% range it is targeting. been there for more than a year.
The prospect of rate cuts bodes well for the US economy, especially given recent concerns that slowing growth will require more rate cuts from the Fed.
Traders were slightly more inclined toward a 50 basis point cut than a 25 basis point cut in September, according to CME Fedwatch.
(Peter Nurse, Ambar Warrick contributed to this item.)
