Oil prices slip ahead of U.S. inventories release

Investing.com — Oil prices fell Wednesday ahead of the release of delayed inventories data, despite optimism over cooling U.S. inflation and some positive Chinese data.

By 09:55 ET (14.55 GMT), the U.S. crude futures traded 1.3% lower at $77.23 a barrel, while the contract dropped 1.1% to $81.60 a barrel. 

U.S. EIA inventory data due 

The U.S. will release its first oil inventory report in two weeks later in the session Wednesday, after a delay last week due to a systems upgrade. 

Data from the , released on Tuesday, indicated a weekly build of just over 1 million barrels. However, this followed last week’s  release by the industry body of a huge build of nearly 12 million barrels.

An increase in stocks of such a size from the world’s biggest producer raises fears that the United States could be close to peak production for crude, while demand slips following the end of the main summer driving season.

Optimistic demand forecasts 

That said, the crude benchmarks are still on course for gains this week after optimistic demand forecasts from both the and the , with both agencies forecasting that U.S. and Chinese oil demand will remain strong in the coming year.

“The IEA revised up its 2023 oil demand growth forecast by around 100Mbbls/d to 2.4MMbbls/d,” said analysts at ING, in a note. “This increase was a result of Chinese demand hitting record levels, while US demand has also been stronger than the agency was expecting.”

Also helping the market has been a sharp drop in the U.S. dollar, after data on Tuesday showed that U.S. eased further in October. This reading ramped up hopes that the Federal Reserve will decide against raising interest rates further, thus choosing not to try and stifle growth further in the largest economy in the world.

Crude is denominated in dollars, and thus a fall in the value of the greenback makes the commodity cheaper for foreign buyers.

Economic growth concerns remain

China’s economic activity perked up in October as increased at a faster pace and growth beat expectations, an encouraging sign for the world’s second-largest economy.

However, there remain concerns over sluggish global demand, particularly in Europe. 

Data released Wednesday showed that eurozone fell by 1.1% month-on-month in September for a 6.9% year-on-year decline, the steepest drop since June 2020, at the height of the COVID-19 pandemic.

The European Commission on Wednesday cut its growth forecast for the eurozone in 2023 to 0.6% from the 0.8% expected in September, citing high inflation, rising interest rates and weak external demand.

Additionally, U.S. fell 0.1% in October after months of strong gains, pointing to slowing demand.

(Ambar Warrick contributed to this article.)

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