Investing.com — Oil prices turned lower on Thursday as a heavy drop in weekly crude oil inventories was offset by new signs of weaker fuel demand following a bigger-than-expected increase in weekly gasoline inventories in the US.
At 2:30 PM ET (18:30 GMT), the barrel was down 1.7% at $82.03, while down 1.5% at $78.01.
Big dip in gasoline stocks signals concerns
U.S. gasoline inventories rose by 2 million barrels last week, well above the expected increase of 1 million, after demand fell by 166,000 barrels per day in the week ended May. 24.
Distillate inventories also rose much more than expected, building to 2.5 million barrels, compared to the forecast of 400,000 barrels.
The build-up of fuel product inventories was fueled by an increase in refining activity to 94.3% of their capacity, compared to 91.7% in the previous week.
The weak fuel demand offset a big decline of 4.2 million barrels and comes as the energy-hungry summer season is now underway in the US.
US GDP growth is slowing
Data released earlier Thursday showed the U.S. rose 1.3% in the first quarter, a significant revision lower than the initial estimate of 1.6%, and below the 3.4% growth in the previous quarter.
While these show a slowdown in economic growth, concerns about high inflation could mean the Federal Reserve keeps interest rates high for longer – a trend that is expected to further dent demand.
Concerns about high U.S. interest rates have been a key pressure on oil prices in recent sessions, as several Fed officials also warned that the bank needed more confidence that inflation was easing before it could start cutting rates.
To that end, the figures – which are the Fed’s preferred inflation gauge – will be released on Friday and are likely to play a role in the central bank’s interest rate outlook.
OPEC+ meeting scheduled
In addition to the Fed and interest rates, oil markets were also awaiting a meeting of the Organization of the Petroleum Exporting Countries and Allies (OPEC+), which will take place virtually on June 2. It is widely expected that the cartel will maintain the current production rate. exceeds the end of June deadline.
Data from China, the world’s biggest oil importer, is also due Friday and is expected to provide more economic clues for the country.
(Peter Nurse, Ambar Warrick contributed to this item.)