Oil prices fell in Asian trade on Wednesday after reports that U.S. oil inventories rose more than expected last week and the U.S. Federal Reserve reined in interest rate cut expectations.
Brent futures were down 11 cents, or 0.13%, at $82.66 a barrel at 04:03 GMT. WTI crude oil futures fell 3 cents to $77.84 a barrel.
The price rally was cut short by higher-than-expected US inflation data, which could push back the rate-cutting cycle. Additionally, inventory increases are expected to surprise the upside this week, and the outage at the BP refinery in Whiting isn’t helping demand-side issues either.
U.S. crude oil inventories rose by 8.52 million barrels in the week ended Feb. 9, market sources said, according to figures released late Tuesday by the American Petroleum Institute. That increase was much larger than the 2.6 million barrel increase expected by analysts.
Crude gains were offset by large product declines, with the data likely reflecting the 435,000-barrel-per-day outage at the Whiting refinery.
API data showed gasoline stocks fell by 7.23 million barrels, while distillate stocks fell by 4.02 million barrels; Both were much larger declines than analysts expected.
Official data from the US Energy Information Administration will be released at 15:30 GMT on Wednesday.
Data released Tuesday also showed that U.S. consumer inflation remained high last month. As a result, investors now expect Fed policymakers to wait longer before cutting interest rates, potentially reducing economic growth and oil demand.
The dollar rose to a three-month high as interest rate cut expectations were postponed. A stronger dollar is weighing on demand for oil among buyers who often pay in other currencies.
According to reports, despite the positive demand outlook, prices have weakened partly according to concerns about supply levels from members of the Organization of Petroleum Exporting Countries (OPEC).
OPEC’s monthly oil market report raised concerns about the group’s commitment to recent production cuts. While Kuwait and Algeria implemented their share of cuts, Iraq’s production exceeded the agreed quota.
