Oil Prices Rise on Signs of Big U.S. Stock Draw, Inflation Hopes By Investing.com

Investing.com– Oil prices rose in Asian trade on Wednesday, boosted by industry data showing a bigger-than-expected draw in U.S. inventories, while weak inflation data also fueled hopes of a further cut deep interest rates.

Sentiment on oil markets was also on edge as traders awaited a retaliatory strike by Iran against Israel, which could come as soon as this week and is expected to escalate geopolitical tensions in the Middle East.

Crude oil expiring in October was up 0.5 percent at $81.09 a barrel, while it was up 0.5 percent at $77.21 a barrel by 8:58 p.m. ET (00:58 GMT).

US Inventories Shrink More Than Expected – API

U.S. data showed U.S. oil inventories fell by 5.2 million barrels in the week to Aug. 10, much more than expectations for a 2 million barrel draw.

Gasoline stocks contracted, while distillate stocks rose slightly.

The reading, which usually heralds a similar reading from , showed that demand remained robust in the world’s biggest fuel consumer, even as the busy summer travel season wound down.

The reading helped oil bulls overcome a recent cut in the Organization of the Petroleum Exporting Countries’ outlook for demand growth in 2024 and also helped ease concerns that slowing U.S. economic growth will hurt demand.

The International Energy Agency also cut its 2024 oil demand forecast this week.

Low rate bets are built with CPI data on tap

On the US economic front, weaker-than-expected data on Tuesday raised hopes that inflation will cool 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 and is also expected to show that inflation eased in July, albeit slightly.

The prospect of interest rate cuts bodes well for the US economy, especially amid recent concerns that slowing growth will require more rate cuts from the Fed.

Traders gravitated slightly more toward a 50-bps cut in September over a 25-bps cut after Tuesday’s data, according to CME Fedwatch.

Beyond inflation data, industrial production and retail sales readings from the US and China are also available this week.