U.S. crude oil falls below $80, hits seven-week low as stockpiles surge on lackluster demand

U.S. oil prices tumbled 3% to dip below $80 a barrel on Wednesday as crude stockpiles surged on lackluster demand.

West Texas Intermediate futures have sold off to the lowest level since March 13 when the commodity traded at $77.57 a barrel.

The commodity has fallen 9% from its intraday high for the year of $87.67 when traders bid up prices in April on war fears in the Middle East.

Here are Wednesday’s latest energy prices:

• West Texas Intermediate June contract: $79.19 a barrel, down $2.69, or 3.15%. Year to date, U.S. crude oil is up 10.4%.
• Brent July contract: $83.60 a barrel, down $2.73, or 3.16%. Year to date, the global benchmark is up 8.5%.
• RBOB Gasoline June: $2.59 a barrel, down 3.5%. Year to date, gasoline is up 23.5%.
• Natural Gas June contract: $1.93 per thousand cubic feet, down 2.7%. Year to date, natural gas is down 22.9%.

U.S. commercial crude oil stockpiles, which exclude the Strategic Petroleum Reserve, surged by 7.3 million barrels to 461 million barrels total last week, according to the Energy Information Administration.

Those are the highest inventory levels since June 2023, said Bob Yawger, director of energy futures at Mizuho Americas. The rate at which refiners process crude to gasoline and other products dropped to 87.5%, significantly lower than the 90.7% in the year-ago period.

The refiners’ utilization rate has fallen as demand for gasoline has been below 9 million barrels per day for four weeks now. The daily average for gasoline demand was 8.5 million bpd last week, 1.3% lower than the same period a year ago.

“The refiner is totally floundering on the run rate and that’s because they don’t believe there’s demand there,” Yawger said.

Traders will be closely monitoring the Federal Reserve’s meeting Wednesday for any indication of the central bank’s future course on interest rates.

A raft of data recently has demonstrated that inflation is proving stubborn, consumer confidence is falling and the U.S. economy is growing more slowly than expected.

In the Middle East, the U.S. and its partners continue to push for a cease-fire in Gaza. An Israeli delegation is in Cairo where negotiations are taking place, an Israeli official told NBC News.

A Hamas delegation was in Cairo on Monday to discuss a proposal to release 33 hostages in exchange for a cease-fire and the release of Palestinian prisoners.

A Hamas official told NBC News that main obstacle to an agreement is settling on an end to the war in Gaza. The official said Hamas does not have a specific date for when it will respond to the current cease-fire proposal.