U.S. crude oil prices continued to plummet on Wednesday, falling over 3% and Brent crude right behind it, shedding over 2.8% on a surprise U.S. inventory build and uncertainty about interest rate cuts and the future of oil demand growth.
On Wednesday at 11:56 a.m. ET, West Texas Intermediate (WTI) was trading at $79.44, down 3.04%, losing $2.49 per barrel on the day. Brent crude was trading at $83.90 per barrel, down 2.81% for a loss of $2.43 on the day.
Earlier on Wednesday, the Energy Information Administration (EIA) released U.S. inventory data, showing a surprise build in crude stockpiles of 7.3 million barrels for the week to April 26, compared with a substantial draw of 6.4 million barrels for the previous week that pushed prices temporarily higher last week.
This week’s crude inventory report from the EIA shows inventory levels at the highest since last June.
On Tuesday, new U.S. economic data suggested that the Federal Reserve will keep interest rates steady, with hoped-for rate cuts looking further away now.
Also weighing on oil prices was the re-emergence of the on-again-off-again prospect of a ceasefire in the Middle East.
“The crude market is weighed down by continued hopes for a ceasefire,” Reuters cited Ole Hansen of Saxo Bank as saying on Wednesday. “In addition, stubborn U.S. inflation has further reduced rate cut expectations.”
Likewise, ANZ Banking Group Ltd analysts told Bloomberg in a note on Wednesday that inflation continues to increase concerns about oil demand ahead of the summer driving season in the U.S., while “the potential for a cease-fire agreement between Israel and Hamas has eased concerns of an escalation of the conflict and any possible disruptions to supply.”