Oil Prices Decline as Production in the US and Brazil Exceeds Expectations

Oil prices have dipped amid an industry report indicating a rise in US stockpiles, moving away from inflation data concerns. Brent crude, the global benchmark, fell by 0.8% to just under $82 per barrel, while West Texas Intermediate saw a 0.7% decrease, falling below $78.

The International Energy Agency has revised its outlook, suggesting that global oil markets may not be as constrained as previously anticipated this quarter. This is due to higher-than-expected production increases in the US and Brazil, contrasting with the OPEC cartel’s analysis, which highlights strong growth trends and solid market fundamentals.

Since mid-October, oil prices have seen a significant drop, influenced in part by the escalation of the conflict between Israel and Hamas, which initially drove prices up.

Additionally, a larger-than-anticipated drop in US inflation reported on Tuesday has fueled speculation that the Federal Reserve might begin reducing interest rates by mid-2024. This prospect, improving the longer-term forecast for oil demand, has contributed to the weakening of the US dollar.

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