Oil prices fall on larger-than-expected increase in US inventories
Investing.com — Oil prices settled lower Wednesday, weighed down by a stronger dollar and a larger-than-expected increase in weekly U.S. crude inventories that renewed concerns about the demand outlook.
By 14:30 ET (19:30 GMT), U.S. crude futures settled $1.60, or 2% lower at $76.66 a barrel, while the Brent contract dropped 1.5% to $80.89 a barrel.
The U.S. Energy Information Administration reported that inventories of U.S. crude rose by about 3.6m barrels in the week ended Nov. 10, well above expectations of a build of about only 1.8m barrels. .
The larger than expected increase soured eased from of the recent optimism about the demand outlook for crude following positive outlooks on demand from both the Organization of Petroleum Exporting Countries and the International Energy Agency. Both agencies estimates that U.S. and Chinese oil demand will remain strong in the coming year.
“The IEA revised up its 2023 oil demand growth forecast by around 100Mbbls/d to 2.4MMbbls/d,” said analysts at ING, in a note. “This increase was a result of Chinese demand hitting record levels, while US demand has also been stronger than the agency was expecting.”
The arise in dollar also added pressure on oil prices as the greenback rebounded from a slide a day earlier despite data on Wednesday showing U.S. producer prices slowed more than expected in October, adding to optimism inflation will continue to slow.
Crude is denominated in dollars, and thus a rise in the value of the greenback makes the commodity expensive for foreign buyers.
China's economic activity perked up in October as industrial output increased at a faster pace and retail sales growth beat expectations, an encouraging sign for the world's second-largest economy.
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