© Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo
By Sonali Paul
MELBOURNE (Reuters) – Oil prices fell on Wednesday, erasing the previous session’s gains, after industry data showed an unexpected build in crude and fuel inventories in the United States, the world’s biggest oil user, which reignited worries about fuel demand.
U.S. West Texas Intermediate (WTI) crude futures fell 59 cents, or 0.8%, to $74.53 a barrel at 0134 GMT, while futures were down 62 cents, or 0.8%, at $79.48 a barrel.
stocks jumped by 14.9 million barrels in the week ended Jan. 6, sources said, citing data from the American Petroleum Institute (API). At the same time, distillate stocks, which include and jet fuel, rose by about 1.1 million barrels.
Analysts polled by Reuters expected crude stocks to fall by 2.2 million barrels and distillate stocks to drop by 500,000 barrels.
Traders will be looking out for inventory data from the U.S. Energy Information Administration due later on Wednesday to see if it matches the preliminary view from API.
The oil market has been pulled lower by worries about U.S. interest rate hikes to curb inflation which would trigger a recession and curtail fuel demand, offsetting hopes for fuel demand growth in China, the world’s second largest oil consumer, as it eases COVID-19 curbs and resumes international travel.
“Monday’s news that China had issued a fresh batch of import quotas suggests the world’s large importer is ramping up to meet higher demand,” ANZ Research analysts said in a note.
The big focus this week is on U.S. inflation data, due on Thursday. If inflation comes in below expectations that would drive the dollar down, analysts said. A weaker dollar can boost oil demand as it makes the commodity cheaper for buyers holding other currencies.