Crude oil prices fell sharply on Wednesday after the Energy Information Administration (EIA) reported a larger-than-expected build in US crude oil inventories, raising concerns about near-term demand and easing supply fears.
EIA Inventory Data
US crude inventories rose by 4.6 million barrels last week, well above the analyst consensus of a 1.2 million barrel build. Gasoline inventories also increased, suggesting weaker-than-expected demand at the pump despite the approaching summer driving season.
WTI crude fell 3.1% to $77.82 per barrel, while Brent crude dropped 2.8% to $82.14. Energy stocks declined across the board, with the S&P 500 energy sector index falling 1.9%.
Impact on Currency Markets
The oil price decline weighed on commodity currencies, with the Canadian dollar (CAD) and Norwegian krone (NOK) underperforming. USD/CAD rose 0.35% to 1.3645 as lower oil prices reduced the relative attractiveness of the Canadian currency.
Russia and Saudi Arabia’s ongoing production cuts had been providing support for oil prices, but the demand side disappointment overrode supply-side support on Wednesday. OPEC+ is expected to maintain its output restrictions at least through the second quarter.