Oil fell for the first time in five sessions after a government report showed swelling U.S. crude inventories and a Federal Reserve official signaled interest rates may remain elevated. 

Crude futures have struggled for direction in recent weeks, but data from the Energy Information Administration Wednesday confirmed that U.S. oil stockpiles have been expanding and are now at the highest level since August. At the same time, comments by the Fed’s Mary Daly dampened hopes that rate hikes would ease.

A jump in 10-year Treasury yields implies that rates will remain elevated, slowing the economy and hurting consumer spending, said Robert Yawger, director of the energy futures division at Mizuho Securities USA. West Texas Intermediate fell 2 per cent to settle below US$77 a barrel on Wednesday. 

The market’s mood is much more hawkish than it was 24 hours ago, and it’s “not as clear cut as it was yesterday,” Yawger said. 

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Despite the large U.S. crude stockpile increase, a drawdown in U.S. product inventories signaled stronger demand for gasoline, diesel and jet fuel, said Rob Thummel, a portfolio manager at Tortoise Capital Advisors. 

“Ultimately, that means refiners are going to buy more oil to produce refined products and that demand for oil ultimately will likely rise,” he said.

The oil market has been weighing differing views on supply and demand. The International Energy Agency said Tuesday that global oil markets won’t be as tight as expected this quarter, with production growth in the U.S. and Brazil beating forecasts. That came after a more upbeat assessment from OPEC that highlighted robust growth trends and healthy fundamentals. 


  • WTI for December delivery fell to settle at 2 per cent to $76.66 a barrel in New York
  • Brent for January settlement dropped 1.6 per cent to settle at $81.18 a barrel.

Oil fell to a three-month low last week after shedding all of the risk premium from the conflict between Israel and Hamas. A soft U.S. inflation print on Tuesday spurred bets the Federal Reserve will start cutting interest rates by mid-2024, aiding the longer-term outlook, but prices have struggled for direction as concerns linger about rising supply and faltering consumption. U.S. producer prices fell the most since April 2020. 

Signs of market softness have continued along the futures curve. The front-month WTI spread flipped to contango — where near-term prices are below longer-dated ones — for the second time in a week, with the second-month contract following suit earlier today, signaling concerns about scarce supplies are easing.