Brent Crude Falls Below $80

The U.S. crude oil benchmark, WTI reversed gains from earlier this week on Wednesday, responding to an unexpected build in U.S. crude stockpiles after a series of drawdowns, and as an Iranian attack on Israel appears to have been temporarily shelved for leverage. 

At 3:03 p.m. ET, Brent crude was trading down 0.90%, just below the $80 mark, while WTI was trading down 1.44% at $77.22.

The Energy Information Administration (EIA) earlier on Wednesday released its weekly inventory report, showing a 1.4-billion-barrel increase in stockpiles for the week ended AUgust 9. That followed a 3.7-million-barrel drawdown from the previous week. The data release came as a surprise to investors who had a day earlier set their sights on the API inventory report that showed stockpiles moving in the opposite direction, with a 5.2-million-barrel decline. 

Oil prices could see their rally rebooted, depending on developments in the Middle East and new economic data. 

Earlier on Wednesday, U.S. economic data showed that year-over-year inflation in July reached its lowest level in more than three years. What that tells market analysts is that the worst of the worst is potentially over, lending optimism to the potential for the Federal Reserve to cut rates in September. 

According to the U.S. Department of Labor, consumer prices increased 0.2% from June to July–a slight increase only, compared with a slight drop in the previous reporting period. Year-on-year, prices rose 2.9%, down from 3% in June. 

Analysts are latching onto the fact that this is the softest increase in inflation since March 2021 and could help buoy oil prices. 

In terms of the Middle East escalation, uncertainty still rules the day, despite indications that Gaza ceasefire talks, set to potentially get underway on Thursday–with or without Hamas–could delay an Iranian strike on Israel.

By Charles Kennedy for Oilprice.com

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