WTI, the U.S. crude oil benchmark, reversed gains from earlier in the week on Wednesday after an unexpected rise in U.S. crude inventories after a series of drawdowns and a threat from Iran to temporarily shelve its attacks on Israel to leverage.
As of 3:03pm ET, Brent Crude was trading just below $80, down 0.90%, while WTI was trading at $77.22, down 1.44%.
The Energy Information Administration (EIA) released its weekly inventory report on Wednesday, Increased by 1.4 billion barrels Inventories fell by 3.7 million barrels for the week ending August 9. This followed a decline of 3.7 million barrels the previous week. The data release came as a surprise to investors who had been following the API inventory report the previous day which showed inventories had fallen by 5.2 million barrels and were moving in the opposite direction.
Depending on the situation in the Middle East and new economic data, crude oil prices could rise again.
U.S. economic data released on Wednesday showed year-on-year inflation hit its lowest level in more than three years in July, signaling to market analysts that the worst may be over and raising optimism that the Federal Reserve could cut interest rates in September.
According to the U.S. Department of Labor, consumer prices rose 0.2% from June to July, a slight increase compared to a slight decline in the previous reporting period. Year-over-year, prices rose 2.9%, down from 3% in June.
Analysts are taking note of the fact that this is the slowest inflation increase since March 2021 and could lead to higher oil prices.
Uncertainty still reigns in the escalating Middle East situation, despite indications that Gaza ceasefire talks, which could begin on Thursday with or without Hamas, could slow Iran’s attacks on Israel.
Article by Charles Kennedy of Oilprice.com
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