Oil Drops As Focus Shifts To US Stockpiles And Cautious Fed
Brent dipped toward $82 a barrel after climbing almost 4% this week, while West Texas Intermediate traded near $78.
(Bloomberg) -- Oil edged lower as investors weighed an unexpected build in American crude stockpiles and the prospect of tighter-for-longer US monetary policy.
Brent dipped toward $82 a barrel after climbing almost 4% this week, while West Texas Intermediate traded near $78. US crude inventories swelled by 3.7 million barrels last week, contrasting with an industry report that had pointed to a draw. Government figures also signaled rising gasoline stockpiles.
US consumer price data had sparked a risk-on mood across broader markets on Wednesday as inflation cooled for a second month, but the Federal Reserve left interest rates unchanged and penciled in just one cut this year.
The earlier gain “has run out of steam with US stock increase and weak exports pointing to a well supplied market,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S. “In addition, the market has been left confused by the big gap in demand outlook seen between IEA and OPEC’s forecasts.”
Oil has trended lower since early April on concerns about the demand outlook and ample supply, while geopolitical tensions eased. The International Energy Agency said in a report on Wednesday that global markets face a major surplus this decade as the shift away from fossil fuels picks up pace.
A commodity carrier is taking on water after being hit by a drone near Yemen, highlighting the persistent risks shippers face sailing through the region. The vessel is called Tutor, according to people familiar, and Houthi militants claimed responsibility for the attack.
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