Oil prices settled lower on Wednesday after sliding more than $3 a barrel in the session after U.S. government data showed big builds in crude oil, gasoline and distillate inventories and OPEC and its allies stuck to their output policy.
Brent crude futures settled down $2.62, or 3.1%, at $82.84 a barrel while West Texas Intermediate (WTI) U.S. crude futures fell $2.46, or 3.1% to settle at $76.41.
U.S. crude oil and fuel inventories rose last week to their highest levels since June 2021, the Energy Information Administration said, as demand remained weak.
Crude inventories climbed 4.1 million barrels in the week ended Jan. 27 to 452.7 million barrels, much steeper than the 0.4 million barrel rise that analysts had forecast in a Reuters poll. It was the sixth straight weekly build, as refining utilization declined and net imports climbed.
“The market is reacting to the report that indicates there isn’t demand for crude oil or fuels,” said John Kilduff, partner at Again Capital LLC in New York.
The Federal Reserve raised its target interest rate by a quarter of a percentage point on Wednesday, yet continued to promise “ongoing increases” in borrowing costs as part of its still unresolved battle against inflation.
“Inflation has eased somewhat but remains elevated,” the U.S. central bank said in a statement that marked an explicit acknowledgment of the progress made in lowering the pace of price increases from the 40-year highs hit last year.
The U.S. dollar last fell 0.9% on the day against a basket of currencies at 101.19.
Ministers from the OPEC+ producer group comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia kept their output policy unchanged on Wednesday.
OPEC’s oil output fell in January, as Iraqi exports dropped and Nigerian output did not recover, with the 10 OPEC members pumping 920,000 barrels per day (bpd) below OPEC+ targeted volumes, a Reuters survey found.
The shortfall was bigger than the 780,000 bpd deficit in December.
Elsewhere, Russia’s Deputy Prime Minister said he expected oil demand to rise on the back of Chinese economic activity.