Investing.com-- Oil prices cut gains to settle lower Wednesday, as a surprise build in U.S. stockpiles pointing an easing in the summer-travel feuled boost to demand.
At 14:30 ET (18:30 GMT), Brent oil futures fell 1.2% to $79.76 a barrel, while West Texas Intermediate crude futures slipped 1.8% to settle at $76.98 a barrel.
US inventories unexpected rise to dent demand optmism
Data from the Energy Information Administration showed U.S. oil inventories rose by 1.4 million barrels in the week to Aug. 9, confounding expectations for a draw of 1.- million barrels.
The unexpected build comes even as refinery activity picked up averaging 16.5 million barrels per day for the week ended Aug. 9, about 65,000 bpd more than the previous week’s average.
Gasoline inventories fell by 2.9M, while distillate inventories fell by 1.7M barrels, compared with estimates for a 1.1M and 1.8M barrel decline.
The reading comes after the Organization of Petroleum Exporting Countries’ and the International Energy Agency trimmed their 2024 demand forecasts this week.
Rate cut bets build after US CPI
U.S. consumer prices increased by less than expected on an annualized basis in July, data released earlier Wednesday showed, increasing the likelihood that the Federal Reserve will start cutting interest rates at its next meeting in September.
The Labor Department's consumer price index (CPI) rose by 2.9% last month, decelerating slightly from 3.0% in June. Stripping out more volatile items like food and fuel, the "core" number climbed by 3.2% in the twelve months to July, below projections of 3.3%.
This release followed Tuesday’s cooler-than-expected July producer price index, and confirms the generally benign inflationary pressures, which could allow the U.S. central bank to cut its policy rate from the 5.25%-5.50% range it has been in for more than a year.
The prospect of interest rate cuts presents a brighter outlook for the U.S. economy, especially amid recent concerns that slowing growth will require more rate cuts from the Fed.
Traders gravitated slightly more towards a 50 basis point cut in September over a 25 bps cut, according to CME Fedwatch.
(Peter Nurse, Ambar Warrick contributed to this item.)