Investing.com– Oil prices fell Wednesday, as investors digested a mixed dataU.S. inventories rose more than expected, but gasoline stockpiles surprised to the downside even as refinery activity inched higher.
By 14:30 ET (19:30 GMT), the futures fell 0.4% lower at $78.54 a barrel and the contract dropped 0.8% to $82.04 a barrel.
Crude stockpiles continue build, but gasoline slips again
Inventories of U.S. crude fell by roughly 4.2 million barrels in the week ended Feb. 25, beating estimates of , marking the third-straight week of larger-than-expected inventory builds.
Gasoline inventories, one of the products that crude is refined into, by 2.8M barrels against expectations of a draw of 1.5M barrels while distillate stockpiles by 510,000 barrels, compared to expectations for a decline of 2.1M barrels.
The bigger draw in gasoline comes even as refinery activity inched higher, rising 0.9% to 81.5%, though remains well below the 93% run rate seen at the start of the year.
GDP data shows slowing U.S. growth
Crude was also pressured by strength in the , as markets positioned for key data this week to gauge the path of U.S. inflation and interest rates.
Data released earlier Wednesday showed that annualised U.S. growth fell to 3.2% in the fourth quarter, down from 4.9% the prior quarter, suggesting economic activity is slowing in the world’s largest economy and biggest consumer of crude.
Several Fed officials have cautioned against cutting rates too soon, though some continue to suggest that three-rate cuts remain in play for 2024.
[M[y view is that something like the three-rate-cuts-this-year projection from December is a reasonable kind of starting point” New York Fed President John Williams said, though added that there was still more work to do on curbing inflation.
Continuation of OPEC+ cuts had prompted gains
Prices were sitting on strong gains from the prior session after media reports suggested that the Organization of Petroleum Exporting Countries and allies (OPEC+) could maintain its current pace of supply cuts into the second quarter, keeping global supplies limited.
Analysts at ANZ wrote in a morning note that strong U.S. refinery demand, high demand for U.S. oil exports and a widening spread between spot oil and one-month futures pointed to tighter physical markets in the coming months- a trend that is positive for oil prices.
They noted that Chinese spot buyers had also increased amid higher demand during the Lunar New Year Holiday, while any potential extension of supply cuts by the OPEC+ heralded even tighter markets later this year.
Biden says Israel agrees to Ramadan ceasefire
Elsewhere. media reports pointing to U.S. President Joe Biden indicating that Israel has agreed to an over month-long halt in fighting in Gaza, for the Muslim holy month of Ramadan.
Israeli and Hamas officials downplayed Biden’s comments. Basem Naim, the head of political and international relations for Hamas reportedly said on Wednesday the “the gap is still wide.”
The Israel-Hamas war has provided a floor to oil prices in recent months, especially amid fears that an extended conflict in the Middle East will disrupt global oil supplies.
Continued attacks by the Yemeni Houthis on vessels in the Red Sea have also disrupted global shipping routes and delayed some oil deliveries in Europe and Asia.
(Ambar Warrick contributed to this article.)
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