SINGAPORE – Oil prices fell in early trade on Wednesday after industry data showed a surprise build in US crude inventories against analysts’ forecast of a decline, reinforcing fears about weakening demand even as supply tightens.
Brent crude futures dropped 19 cents, or 0.2 percent, to $80.49 per barrel, while US West Texas Intermediate (WTI) crude futures fell 15 cents, or 0.2 percent, to $75.24.
Market players are also taking profits as risks persist ahead of a US Federal Open Market Committee meeting, said Tina Teng, a CMC Markets analyst.
“But I still expect that oil prices may continue their recent rebounding pace,” she said, adding that previous selloffs, fueled by fears of recession, had paused after two consecutive data releases indicated cooler US inflation.
US Federal Reserve policymakers are expected to raise interest rates by 50 basis points on Wednesday, slowing from the 75-basis-point pace they had stuck to in meetings since June as they grapple with inflation.
The US consumer price index rose 0.1 percent in November after advancing 0.4 percent the previous month.
“Any commentary from the Fed indicating further deceleration of rate hikes in the US would be supportive to oil prices from here,” said Baden Moore, head of commodities research at National Australia Bank.
US crude inventories rose by about 7.8 million barrels in the week to Dec. 9, according to market sources citing data from the American Petroleum Institute, while analysts polled by Reuters had expected a 3.6 million barrel drop in stocks.
The inventory data dampened bullish sentiment that sent the market up 3 percent in the previous session, on hopes for a revival in Chinese demand with the easing of COVID-19 restrictions and for a weakening dollar after data showed US inflation subsiding.
ANZ Research analysts, citing data from Chinese firm VariFlight, highlighted signs of domestic travel picking up in China, with flight activity having surged to around 65 percent of pre-pandemic levels on Monday, up from 22 percent on Nov. 29.
