Investing.com– Oil prices settled slightly higher Wednesday, though gains were capped by unexpected build in U.S. inventories and a stronger dollar.
At 14:30 ET (18:30 GMT), Brent oil futures rose 0.28% to $85.28 a barrel, while West Texas Intermediate crude futures gained 0.1% to settle at $80.90 a barrel.
US inventories see unexpected build
Data from Energy Information Administration showed that domestic crude and gasoline stocks unexpectedly increased last week at a time when many are hoping for the traditional summer dip in crude inventories.
The Energy Information Administration reported Wednesday that U.S. oil inventories grew by around 3.6 million barrels in the week to Jun. 21, against expectations for a draw of 2.6M barrels.
In another bearish surprise, gasoline supplies rose by about 2.7M barrels, confounding expectations for 1.1M barrel decline, while distillates by 377,000 barrels, missing forecasts for a fall of 1.5M barrels.
Brent hits “summer peak” – Goldman
Both contracts are still sitting on strong gains over the past two weeks, as persistent geopolitical tensions- Israeli strikes on Gaza and Ukrainian attacks on Russian refineries- kept traders pricing a risk premium into oil prices.
Brent crude prices have touched their “summer peak” of $86 per barrel, according to projections from analysts at Goldman Sachs.
In a note to clients, the analysts noted that “U.S.-led strong summer traveling activity” and strong global jet demand is continuing to support the benchmark contract.
Persistent geopolitical tensions “remain on the market’s radar,” the bank added.
Rate fears, dollar strength limits crude upside
That said, despite the strength of the past two weeks, overall gains were still held back by concerns over high U.S. interest rates, which saw traders favor the dollar.
The greenback hovered near two-month highs as recent signs of resilience in the U.S. economy pushed up concerns that the Federal Reserve will have more headroom to keep rates high for longer.
Focus this week is largely on key PCE price index data, which is the Fed’s preferred inflation gauge and which is likely to drive the central bank’s outlook on rates.
A string of Fed officials also offered up hawkish warnings this week. The prospect of high for longer interest rates has been a key weight on oil prices, as traders fear that economic activity will cool in the coming months.
(Peter Nurse, Ambar Warrick contributed to this article.)
This post is originally published on investing.com.
