Investing.com — Oil prices edged higher on Wednesday, although gains were limited by an unexpected rise in U.S. inventories and a stronger dollar.
At 2:30 PM ET (18:30 GMT), the price rose 0.28% to $85.28 per barrel, while rising 0.1% to settle at $80.90 per barrel.
American inventories are unexpectedly building up
Data from the Energy Information Administration shows that domestic inventories of crude oil and gasoline rose unexpectedly last week, at a time when many are hoping for the traditional summer dip in crude inventories.
The report said on Wednesday that US oil inventories grew by about 3.6 million barrels in the week to June 21, while oil inventories were expected to decline by 2.6 million barrels.
In another bearish surprise, gasoline inventories rose by about 2.7 million barrels, clouding expectations for a 1.1 million barrel decline, while distillates missed forecasts for a 1.5 million barrel decline by 377,000 barrels.
reaches “summer peak” – Goldman
Both contracts continued to post strong gains over the past two weeks as continued geopolitical tensions (Israeli attacks on Gaza and Ukrainian attacks on Russian refineries) caused traders to price a risk premium into oil prices.
According to forecasts by analysts at Goldman Sachs, Brent crude oil prices have reached their ‘summer peak’ of $86 per barrel.
In a note to clients, the analysts noted that “US-led strong summer travel activity” and strong global aircraft demand continue to support the benchmark contract.
Ongoing geopolitical tensions “remain on the market’s radar,” the bank added.
Interest rate fears and strong dollar limit crude oil’s upside potential
That said, despite the strength over the past two weeks, overall gains were still held back by concerns about high US interest rates, leading traders to favor the .
The dollar hovered around a two-month high as recent signs of resilience in the US economy raised concerns that the Federal Reserve will have more room to keep interest rates high for longer.
Much of the focus this week is on key data, which is the Fed’s favorite inflation gauge and will likely shape the central bank’s interest rate outlook.
A series of Fed officials also issued aggressive warnings this week. The prospect of high longer-term interest rates has put significant pressure on oil prices as traders fear economic activity will cool in the coming months.
(Peter Nurse, Ambar Warrick contributed to this article.)
