Investing.com – Oil prices fell on Wednesday on new signs of weakening summer crude demand, after weekly inventories fell much less than expected.
At 2:10 PM ET (18:10 GMT), the stock was down 1% at $77.84 per barrel, down 1% to $74.81 per barrel.
US inventories are falling much less than expected
The report said on Wednesday that crude inventories fell by 846,000 barrels in the week to August 3, compared with a drop of 4.7 million barrels in the previous week and expectations for a decline of 2.7 million barrels.
The small drop came just a day after it emerged that US oil inventories fell 3.4 million barrels in the week to August 23.
The data indicates that the high-travel summer season is coming to an end, which could cause some cooling in U.S. fuel demand.
However, gasoline inventories fell by 2.2 million barrels for the period, compared to expectations for a decline of 1.6 million barrels, while distillates inventories unexpectedly rose by 275,000 versus expectations or a decrease of 1.1 million barrels.
Refinery activity picked up slightly, rising from 92.3% the week before to 93.3% of capacity.
The recovery of the dollar is creating further pressure
Crude oil prices were also weighed down by a recovery in interest rates, as investors focused on the prospect of US rate cuts expected next month.
Because oil is priced in dollars, a rising dollar tends to hurt demand from non-dollar buyers.
However, the dollar’s recovery is expected to be short-lived as falling government bond yields due to expectations for rate cuts are likely to halt the upward trend.
“Falling USD yields have made the dollar significantly cheaper to short positions and the overall dollar weakness is fully consistent with the Fed’s dovish outlook being relayed to asset markets,” ING said in a recent note.
(Peter Nurse, Ambar Warrick contributed to this article.)
