Oil prices fall on signs of rising US inventories; rate cut in focus By Investing.com

Investing.com– Oil prices fell in Asian trade on Wednesday, paring a recent rally, as industry data showed an unexpected rise in U.S. inventories.

But prices have enjoyed strong gains over the past week as persistent supply disruptions from Hurricane Francine and the prospect of lower rates sent traders hitting crude at sharply reduced levels.

An escalation in Middle East tensions also helped boost crude demand as Hezbollah vowed retaliation against Israel after it accused it of setting off pagers in Lebanon this week.

It fell 0.4 percent to $73.41 a barrel, while it was down 0.4 percent to $69.69 a barrel by 9:17 p.m. ET (01:17 GMT). Both contracts rose sharply from near three-year lows last week.

US Inventories Unexpectedly Rise – API

US oil stockpiles data showed an unexpected rise in the week to September 13.

Inventories rose by 1.96 million barrels, compared with expectations for a 0.1 mb draw and a 2.79 mb draw from the previous week.

The reading comes after official data last week showed a rise in US inventories, indicating that demand in the world’s biggest consumer of fuel is cooling as the busy summer travel season ends.

API data usually heralds a similar reading from , which is due later on Wednesday. The unexpected build also points to limited, real production disruptions from Hurricane Francine, which swept through the Gulf of Mexico last week.

Demand concerns, rate cuts in focus

Chinese markets reopened on Wednesday after an extended holiday, with local traders reacting to a wave of weak economic readings in the country.

The readings raised concerns about slowing growth in the world’s biggest oil importer, which could dampen its appetite for crude.

Markets were also on edge ahead of the end of a two-day period later in the day in which the central bank is expected to cut interest rates for the first time in more than four years.

Markets are divided between expectations for a 25 or 50 basis point decline.

Anticipation of Wednesday’s decision dragged down the dollar, which helped spur some gains in crude oil.