Oil Losses Widen on Fears of Rising U.S. Inventories and Uncertainty Regarding the CPI

Wednesday oil prices extended overnight declines as industry data indicated a larger-than-anticipated increase in U.S. oil stockpiles over the previous week.

Investors were especially concerned about the anticipated U.S. CPI inflation data, which might signal a greater likelihood of a Federal Reserve rate hike.

At 20:45 ET (00:30 GMT), Brent Oil Futures declined 0.4% to $96.09 per barrel, while U.S. Crude Oil WTI Futures decreased 0.3% to $90.22 per barrel. On Tuesday, both contracts dipped, albeit somewhat, as a potential supply bottleneck in Europe briefly pushed up prices.

The American Petroleum Institute stated that oil inventories in the United States climbed by a greater amount than expected over the previous week. Unlike the forecast of fewer than 100,000 barrels, crude oil, gasoline, and distillates stockpiles remained at 2.16 million barrels. The number very definitely foreshadows a similar outcome from official numbers released later in the day, which would mark the second week in a row of unexpectedly high oil inventories in the United States.

Contrary to market expectations, U.S. crude oil inventories grew by more than 4 million barrels last week, resulting in a decline in oil prices.

The results imply that U.S. oil consumption is falling as a result of rising inflation and a weakening industrial sector, which may portend further challenges for the petroleum markets.

In the next months, it is also projected that global industrial activity would have an effect on crude demand. Since the commencement of Russia's invasion of Ukraine, the price of oil has decreased by more than $40, as rising global costs have dramatically reduced demand.

The spotlight is currently on the upcoming U.S. inflation figures, slated for release at 8:30 a.m. ET. While the data is expected to suggest a little decrease in prices from the previous month, inflation is expected to remain above levels not seen in forty years.

This would almost probably compel the Federal Reserve to hike interest rates further in September, a move that might have a negative impact on economic development and further reduce oil prices.