Oil fell as an industry estimate pointed to another major build in American inventories and the dollar gained, with investors assessing the outlook for even tighter US monetary policy to combat sticky inflation.
West Texas Intermediate fell below $78 a barrel after ending 1.4% lower on Tuesday. The industry-funded American Petroleum Institute reported that US commercial crude inventories rose by 10.5 million barrels last week, according to people familiar with the figures. Official data come later Wednesday.
Prices fell even after a brighter outlook from the International Energy Agency, which lifted its estimates for global oil demand this year as China’s economy reopens. The world’s largest importer has been on a crude oil buying spree in recent weeks, the latest sign of more positive demand as China emerges from Covid.
A US plan for a mandated sale of barrels from the Strategic Petroleum Reserve has also weighed on prices. That’s added to the burden of expectations for higher US interest rates and a stronger dollar, which reduces the appeal of commodities such as oil.
“Prices are dropping anew this morning amid worries over swelling US oil supplies,” said Stephen Brennock, an analyst at brokerage PVM. “The latest US CPI data were a cause for concern given that they highlighted the risk of renewed inflationary pressures.”
Prices:
WTI for March delivery shed 1.4% to $77.98 a barrel at 10:23 a.m. in London.
Brent for April settlement lost 1.2% to $84.57 a barrel.
The Bloomberg Dollar Spot Index rose 0.3%.
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