Oil Prices Fall on Rising U.S. Stockpiles and Cautious Fed Outlook

Oil prices dropped on Thursday after data revealed an unexpected increase in American crude and gasoline reserves.

Price Breakdown

  • WTI Crude Oil: July contracts (WTI CL.1) closed at $77.79 per barrel, down 71 cents (0.9%).
  • Brent Crude Oil: The global benchmark, Brent (BRN00), for August delivery settled at $81.95 per barrel, a decrease of 65 cents (0.8%).
  • Gasoline and Heating Oil: July gasoline (RBN24) dipped 0.6% to $2.381 per gallon, while July heating oil (HON24) fell slightly (0.4%) to $2.432 per gallon.
  • Natural Gas: July natural gas (NGN24) prices inched down 0.3% to $3.036 per million British thermal units.

Market Forces

Oil prices had risen on Wednesday, buoyed by a weakened U.S. dollar following a lower-than-anticipated inflation report. However, trading became volatile after the Federal Reserve’s policy update, which signaled a possible slowdown in interest rate cuts for the year.

  • Dollar Strength: The U.S. dollar strengthened on Thursday, which can put downward pressure on commodities like oil since they become more expensive for countries using other currencies.
  • Inventory Surprise: The key driver for the price drop was a report by the Energy Information Administration (EIA) showing a rise in U.S. crude oil stockpiles (3.7 million barrels) for the week ending June 7th. This exceeded analyst expectations for a decrease. Stockpiles of gasoline and distillates also increased unexpectedly.

Overall, the oil market is grappling with an uncertain demand outlook and potential increases in supply, which is countering any support from a weaker dollar.pen_sparktunesharemore_vert

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