Oil prices edged lower on Wednesday after the American Petroleum Institute (API) reported that crude inventories rose more than expected last week, while investors lowered expectations for the US Federal Reserve to ease monetary policy.
The Brent crude futures were down by 0.12 USD, or 0.14%, at 82.29 USD per barrel, while the US West Texas Intermediate (WTI) futures were down by 0.11 USD, or 0.14%. to 77.98 USD per barrel.
“The rally was interrupted by higher-than-expected US inflation data, which is likely to delay rate cuts”, said the DBS Bank head of energy sector Suvro Sarkar. “Additionally, oil stocks could surprise with a higher-than-expected rise this week, and the shutdown at BP’s Whiting refinery won’t help demand either”, added he.
US crude inventories rose by 8.52 million barrels in the week ended February 9, according to market sources citing American Petroleum Institute data released late on Tuesday.
That rise was much larger than the 2.6 million barrel increase expected by analysts.
“The build-up of crude oil inventories will cause bearish sentiment in the market. However, it was offset by large declines in crude products”, ING analysts said in a note, adding that the data likely reflected an outage at the 435,000-barrel-a-day Whiting refinery.
API data showed gasoline stocks fell by 7.23 million barrels and distillates stocks fell by 4.02 million barrels, both declines much larger than analysts had expected.
Official data from the US Energy Information Administration (EIA) will be released on Wednesday.
Tuesday’s inflation results also weighed on the market as they showed that US consumer prices remained high last month. Investors are currently expecting Fed central bankers to delay interest rate cuts, potentially slowing economic growth and oil demand.
Amid interest rate cut expectations, the dollar strengthened to a three-month high. A stronger dollar usually affects demand for oil among buyers in other currencies.
ANZ analysts said prices weakened partly on supply concerns from members of the Organization of the Petroleum Exporting Countries (OPEC), despite an overall bullish demand outlook in the group’s monthly report on Tuesday.
“OPEC’s monthly oil market report … raised some concerns about the group’s adherence to recent production cuts. Only Kuwait and Algeria have met their share of cuts and Iraq’s production is well above the agreed quota”, said the ANZ analysts commented in a client note.
