Washington, Feb. 15 (BNA): Oil prices extended their losses on Wednesday, as a much larger-than-expected rise in US crude inventories and expectations of an interest rate hike raised concerns about the possibility of weak fuel demand and economic recession.
Brent crude futures fell 72 cents, or 0.8%, to $84.86 a barrel by 0442 GMT, while US West Texas Intermediate crude futures fell 68 cents, or 0.9%, to $78.38, Reuters reported.
US crude inventories rose by about 10.5 million barrels in the week ending February 10, according to market sources, citing figures from the American Petroleum Institute (API) on Tuesday.
The increase was much larger than the 1.2 million-barrel increase expected by nine analysts polled by Reuters, likely indicating a drop in fuel demand.
Gasoline stocks rose by about 846,000 barrels, while distillate stocks rose by about 1.7 million barrels, according to the sources, who asked not to be identified.
Analysts from Haitong Futures said, “The American Petroleum Institute’s data put increasing pressure on the oil market, as this will be the eighth week of building inventories.. Tepid demand in the US market will continue to reduce oil prices in the near term.”
Meanwhile, a Federal Reserve official said on Tuesday that the US central bank will need to continue to raise interest rates gradually to beat inflation after data showed US consumer prices accelerated in January.
“We now expect the FOMC to extend tightening through the second quarter and we expect interest rate increases of 25 basis points (bps) at the FOMC meetings in May and June, in addition to the hike in March that we had already anticipated,” he said. Analysts from ANZ Bank.
Also weighing on crude oil prices was the announcement this week by the US Department of Energy (DOE) that it would sell 26 million barrels of oil from the country’s Strategic Reserve, which is already at its lowest level in nearly four decades.
Prices received some support from the Organization of the Petroleum Exporting Countries (OPEC), as it raised its forecast for global oil demand growth for 2023 in its first upward revision in months, as China reopened and cut supply forecasts for major non-OPEC producers, signaling a tightening market. . .
OPEC said global oil demand will rise this year by 2.32 million bpd, or 2.3 percent, raising expectations from February by 100,000 bpd.