Brent Crude drops below $80

The US crude oil benchmark WTI reversed gains from earlier this week on Wednesday in response to an unexpected rise in US crude inventories after a series of cuts and an Iranian attack on Israel appeared to have been temporarily suspended for leverage.

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

The Energy Information Administration (EIA) released its weekly inventory report earlier Wednesday, showing a Increase of 1.4 billion barrels in stocks for the week ending August 9. This followed a 3.7 million barrel reduction from the previous week. The release of the data came as a surprise to investors who looked a day earlier to the API inventory report, which showed stocks moving in the opposite direction, down 5.2 million barrels.

Oil prices could resume their rise, depending on developments in the Middle East and new economic data.

Earlier on Wednesday, US economic data showed that year-on-year inflation in July hit a three-year low. What it tells market analysts is that the worst of the worst is potentially over, fueling optimism about the Federal Reserve’s potential to cut rates in September.

According to the US Labor Department, consumer prices rose 0.2% from June to July – only a slight increase compared to a slight decline in the previous reporting period. Year-to-date, prices rose 2.9%, down from 3% in June.

Analysts point to this being the weakest rise in inflation since March 2021 and could help boost oil prices.

As for the escalating Middle East, uncertainty still rules the day, despite indications that ceasefire talks in Gaza, which could begin on Thursday – with or without Hamas – could delay an Iranian strike on Israel.

By Charles Kennedy for Oilprice.com

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