Early on Wednesday in Asian trading, oil prices dropped as investors reduced their expectations of a U.S. Federal Reserve interest rate cut and a U.S. industry organization reported that crude stocks increased more than anticipated last week. When the market started at 0000 Brent futures dropped 29 cents, or 0.4%, to $82.48. West Texas Intermediate (WTI) oil futures for the United States dropped 22 cents, or 0.3%, to $77.65 per barrel.
Market sources cited data from the American Petroleum Institute issued late on Tuesday to indicate that U.S. crude oil stockpiles increased by 8.52 million barrels in the week ending on February 9.
“Crude oil builds were largely negative. ING analysts noted in a note that “this was offset by large product declines,” and that the figures most likely reflected BP’s daily outage of 435,000 barrels from the Whiting refinery. According to the API statistics, distillate stocks decreased by 4.02 million barrels and gasoline inventories decreased by 7.23 million barrels, both significantly more than analysts had predicted.
U.S. consumer inflation remained high last month, which further affected the market. Investors now anticipate that Fed officials would hold off on reducing interest rates for longer, which could stifle economic expansion and oil consumption.
As rate drop predictions were pushed out, the dollar reached a three-month high. Buyers paying in other currencies usually have less demand for oil when the dollar is stronger.
