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22/05/24
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Crude Prices Drop After Unexpected US Inventory Build
On Wednesday, crude prices dropped for the third consecutive session as industry data showed U.S. inventories built unexpectedly, fueling doubts over demand in the biggest crude consumer in the world.
Brent oil futures dropped 1.1% to $81.98 per barrel, and West Texas Intermediate crude futures dropped 1.1% to $77.82 per barrel.
The American Petroleum Institute’s data showed that U.S. oil inventories rose by 2.5M barrels in the week that ended on May 17, while markets expected a 3.1M barrel draw.
The surprising build in inventories increased concerns over sluggish oil demand in the U.S., especially before the Memorial Day holiday, which is traditionally the start of the summer driving season. The API data is usually followed by a similar reading from official inventory data due later today.
Traders were worried that pressure from persistent inflation and high interest rates may hamper demand growth in the coming months, as gasoline stockpiles also grew by 2.1M barrels.
Sentiment was also weighed down by worries that the Federal Reserve may keep U.S. interest rates higher for longer due to persistent inflation, possibly affecting fuel use in the biggest consumer in the world.
Several Fed officials have said that the central bank required more confidence that inflation was subsiding before it would cut interest rates.
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