London markets are treading water this morning ahead of the latest US crude oil inventory figures, due out at 3.30pm BST from the Energy Information Administration. Analysts are forecasting a modest drawdown of around 2.5 million barrels for the week ending 17 July, following a larger-than-expected build the previous week. Any deviation from that estimate could send oil prices — and by extension, UK fuel costs — in either direction.
Brent crude, the international benchmark, was trading at approximately $82.50 per barrel in early Asian hours, down from $84.10 a week ago. The recent softening reflects persistent worries about demand from China, the world's largest crude importer, where industrial output and refinery runs have disappointed. Meanwhile, OPEC+ has signalled it could adjust its planned output increases if demand falters, adding another layer of uncertainty to the commodity's outlook.
For UK consumers, the stakes are tangible. Average petrol prices at the pump currently stand at 146.8p per litre, according to the RAC, down slightly from last month but still well above the 2023 average. A surprise drawdown in inventories — suggesting tighter supply — could push wholesale costs higher, potentially reversing the recent gentle decline in forecourt prices. Conversely, a larger-than-expected build could offer some relief for motorists and businesses grappling with high transport costs.
The FTSE 100 opened broadly flat at 8,195 points, with the energy sector under mild pressure. BP shares slipped 0.3% to 487.2p, while Shell fell 0.2% to 2,847p, as traders trimmed positions ahead of the data. The wider index has been rangebound this week, with gains in defensive stocks offset by weakness in miners and financials. 'The oil inventory release is the standout event on an otherwise quiet calendar,' said James Cartwright, market analyst at London-based brokerage Redmayne Bentley. 'It will set the tone for energy stocks and could influence the Bank of England's thinking on inflation persistence.'
The data comes at a sensitive time for UK pension holders, many of whom are exposed to energy stocks through their workplace pension funds. The FTSE 100's heavy weighting in oil and gas means that sustained moves in crude prices can directly affect the value of defined contribution pots. A sharp drop in oil prices could drag the index lower, while a rally might boost returns — but also feed through to higher household energy bills, squeezing disposable income.