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What’s happening: Oil prices fell on Wednesday, as investors assessed the latest data on US inventories.
What happened: Official data released on Wednesday showed US crude inventories rising last week, which sent oil prices lower for the second straight session.
Strength in the US dollar also exerted pressure on oil prices.
Why it matters: Crude oil prices tumbled around 5% on Tuesday, after recording sharp gains so far this month. Rising geopolitical tensions fuelled supply concerns, lending support to crude prices.
Supply concerns eased on news of Hurricane Milton not significantly impacting production in the Gulf of Mexico.
The Energy Information Administration (EIA) said on Wednesday that US commercial crude inventories rose by 5.8 million barrels during the week ended October 4. This was much higher than market expectations of a gain of 1.4 million barrels.
Data also showed gasoline supplies falling 6.3 million barrels and distillate supplies contracting by 3.1 million barrels last week. Analysts had projected a decline of 1.5 million barrels in gasoline supplies and of 1.8 million barrels in distillate supplies.
The EIA also said that US oil production had increased by 100,000 barrels to 13.4 million bpd (barrels per day) during the latest week.
Earlier this week, the EIA had slashed its global oil demand projections by 300,000 bpd to around 1.2 million bpd in 2025.
Strength in the US dollar also exerted pressure on oil prices, as a higher greenback makes commodities more expensive for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.4% to 102.93 on Wednesday.
WTI crude for November delivery declined 33 cents to close at $73.24 per barrel on the NYMEX (New York Mercantile Exchange), after shedding 4.6% in the previous session. December Brent crude, the global benchmark, settled almost flat at $76.58 per barrel on ICE Futures Europe.
In other energy trading, November gasoline settled at $2.0664 a gallon, while November heating oil fell to $2.2769 a gallon and natural gas for November delivery dipped to $2.660 per million British thermal units.
What to watch: Investors await the release of data on natural gas stockpiles from the EIA today. US natural gas supplies had risen by 55 billion cubic feet (bcf) in the week ended September 27, compared to market estimates of a 57 bcf gain.
Context: Equity markets in the US settled higher on Wednesday, as investors monitored the minutes from the Federal Reserve’s latest meeting.
Details: Minutes from the September FOMC (Federal Open Market Committee) meeting showed a heated debate over the rate cut announced in September. Most of the central bank policymakers supported the announced rate cut of 50 basis points (bps), while some officials voiced a preference for 25 bps.
Traders have dialled back their speculations of aggressive interest rate cuts by the US Federal Reserve after the release of better-than-expected jobs data last week.
On the economic data front, US wholesale inventories edged higher by 0.1% in August, versus a gain of 0.2% in the previous month.
Big banks, including, JPMorgan Chase, Wells Fargo and Citibank are scheduled to release their quarterly earnings results on Friday.
The Dow Jones index gained 431.63 points, or 1.03%, to close at 42,512.00 on Wednesday, while the S&P 500 added 0.71% to 5,792.04 and the Nasdaq 100 rose 0.80% to close at 20,268.86.
What to watch: Investors await the release of economic data on jobless claims and inflation from the US today. The annual inflation rate in the US is expected to ease for a sixth straight month to 2.3% in September, from 2.5% in the previous month. Analysts expect the CPI in the US to increase 0.1% in September, after a 0.2% rise in August.
The number of people claiming jobless benefits, which increased by 6,000 to a reading of 225,000 in the week ending September 28, is expected to rise to 230,000 in the latest week.
Other Markets: European indices closed higher on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.65%, 0.99%, 0.52% and 0.66%, respectively.
Russia’s Ministry of Defence said its military forces had seized Hrodivka, a second town in a week in the eastern region of Donetsk in Ukraine. The news sent the RUB/USD pair slightly higher in forex trading this morning.
The Philippines said its trade deficit widened to $4.4 billion in August, from $4.1 billion in the year-ago month, exerting pressure on the PHP/USD forex pair.
Australia’s private house approvals rose by 0.5% to a 22-month high of 9,338 units in August, which sent the AUD/USD pair higher in forex trading this morning.
Mexico’s annual inflation rate eased to 4.58% in September. This being the lowest reading since March lent support to the MXN/USD forex pair.
The Bank of Israel held its policy rate at 4.5%, which sent the ILS/USD pair lower in forex trading this morning.
Germany’s retail sales, Turkey’s industrial production, jobless rate, labour activity rate and foreign exchange reserves, Italy’s industrial production, South Africa’s gold production, mining production and industrial production, European Central Bank’s monetary policy meeting accounts, Brazil’s retail sales, US continuing jobless claims, government budget and central bank balance sheet, Bank of Mexico’s monetary policy meeting minutes, Saudi Arabia’s industrial production, as well as Argentina’s inflation rate.
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