Anika Begay
Vscek – Oil prices rose in Asian trade on Wednesday, buoyed by industry data that showed a larger-than-expected decline in U.S. inventories, while weak inflation data fueled hopes of deeper interest rate cuts.
Sentiment towards oil markets was also tense, as traders awaited a retaliatory attack by Iran against Israel, which could happen as early as this week and would increase geopolitical tensions in the Middle East.
with October maturity rose 0.5% to $81.09 a barrel, while it was up 0.5% at $77.21 a barrel by 8:58 PM ET (0058 GMT).
US inventories fall more than expected – API
Data showed U.S. oil inventories fell by 5.2 million barrels in the week ended Aug. 10, far more than expectations for a 2 million-barrel decline.
Gasoline inventories declined, while distillate inventories increased slightly.
The reading, which typically heralds a similar reading starting in , showed that demand remained solid in the world’s largest fuel consumer even as the busy summer travel season drew to a close.
The reading helped oil bulls overcome the Organization of the Petroleum Exporting Countries’ recent cut in its forecast for demand growth in 2024, and also helped ease fears that slowing U.S. economic growth could hurt demand.
This week, the International Energy Agency also cut its oil demand forecast for 2024.
Rate Cut Bets Rise as CPI Data Arrives
On the U.S. economic front, weaker-than-expected data released Tuesday fueled hopes that inflation is cooling and that the Federal Reserve will have more impetus to cut interest rates.
The reading came just ahead of inflation data, due later on Wednesday, which is also expected to show inflation slowing in July, albeit slightly.
The prospect of interest rate cuts offers a rosier outlook for the U.S. economy, especially given recent concerns that slowing growth will require further rate cuts by the Fed.
According to CME Fedwatch, traders were slightly more likely to see a 50 basis point cut in September than a 25 basis point cut after Tuesday’s data.
In addition to inflation data, industrial production and retail sales data from the United States and China will also be released this week.
