Investing.com-- Oil prices settled lower Wednesday, as traders looked ahead to fresh petroleum inventory data for signs of a pick up demand as the U.S. summer season gets underway.
At 14:30 ET (18:30 GMT), West Texas Intermediate crude futures slipped 0.8% to settle at $79.23 a barrel, and Brent oil futures fell to 0.7% to $83.60 a barrel.
Fresh U.S. inventory data on tap
Upcoming inventory data is expected to show to the pick in demand from the start of the U.S. summer season, which usually marks at least two months of elevated demand in the world’s biggest fuel consumer. The American Petroleum Institute is set to unveil its estimate of U.S. crude inventories later in the session.
Economists forecast that crude oil inventories fell by 1.9M barrels in the week ended May 22, though gasoline and distillate inventories are expected to have increased from the prior week.
Still, optimism over the U.S. was held back by repeated warnings from the Federal Reserve that interest rates will potentially stay high for longer, amid sticky inflation.
This boosted the dollar, limiting any major upside in crude.
Focus this week is on key U.S. PCE price index data, which is the Fed’s preferred inflation gauge. A string of Fed officials are set to speak this week, while a revised reading on first quarter gross domestic product is also on tap.
OPEC+ expected to keep supply cuts in place
Traders also bet that the Organization of Petroleum Exporting Countries will keep ongoing production cuts in place during a meeting over the weekend.
The group is currently cutting output by 5.86 million barrels per day (bpd), equal to about 5.7% of global demand, in an attempt to balance a market hit by falling demand.
The cuts include 3.66 million bpd by OPEC+ members to the end of 2024, as well as a further 2.2 million bpd of voluntary cuts by some members, mainly Saudi Arabia, which expire at the end of June.
The move to forgo an in-person meeting, likely signals a “nothing to see here” production decision through year end, according to analysts at RBC Capital Markets, in a note dated May 28.
“We see no appetite at this juncture to add more barrels to the market and trigger another price move to the downside. The current price level is already causing several producers to take on additional debt and push out timelines for some high-profile projects,” RBC added.
(Ambar Warrick contributed to this article.)