Oil Prices Slip Amid US Crude Stock Build and Inflation Concerns
Oil Prices Slip in Asian Trade
Oil prices slipped in Asian trade on Wednesday following a report from a U.S. industry group indicating a larger-than-expected rise in crude stocks last week. Additionally, investors scaled back their expectations for interest rate cuts by the U.S. Federal Reserve.
International benchmark Brent crude futures fell 11 cents, or 0.13%, to $82.66 a barrel at 0403 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures dropped 3 cents to $77.84 a barrel.
“The (price) rally has been cut short by the higher than expected US inflation print, which has the potential to push back the rate cut cycle,” said Suvro Sarkar, the lead of DBS Bank’s energy sector team.
US Crude Stock Build and Market Response
Market sources citing American Petroleum Institute figures revealed that U.S. crude oil inventories rose 8.52 million barrels in the week ended Feb. 9, well above the 2.6 million barrel increase that analysts had anticipated.
However, the data also showed significant declines in gasoline and distillate stocks, offsetting the bearish impact of the crude oil build. Official data from the U.S. Energy Information Administration is expected on Wednesday at 1530 GMT.
ANZ analysts highlighted concerns about supply levels from OPEC members, particularly regarding adherence to production cuts. OPEC’s monthly oil market report raised doubts about the group’s commitment to the agreed quotas.
Impact of US Consumer Inflation
Recent data revealed that U.S. consumer inflation remained elevated, prompting investors to anticipate a delay in interest rate cuts by the Federal Reserve. This expectation of postponed rate cuts led to a rise in the dollar, which typically has a dampening effect on oil demand among non-dollar buyers.
Market Outlook
Despite concerns about OPEC’s production cuts, the overall demand outlook for oil remains bullish. However, the market is keeping a close watch on supply levels and the impact of economic factors on oil demand.
As the market awaits official data from the U.S. Energy Information Administration, the future direction of oil prices is uncertain, with various factors contributing to the current volatility.
