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Brent crude dropped 74 cents, or 1%, to $76.69 a barrel by 1115
GMT while U.S. West Texas Intermediate (WTI) crude fell 75
cents, or 0.9%, to $72.97.
In a possible sign of weakening demand, U.S. crude inventories
rose by about 3.6 million barrels in the week ended May 5 while
gasoline stockpiles rose by 399,000 barrels, the American
Petroleum Institute was reported as saying by market sources on
Tuesday.
The data defied expectations from eight analysts polled by
Reuters for a drawdown of 900,000 barrels of crude and a 1.2
million barrel drop in gasoline stocks. U.S. government data on
oil inventories is due on Wednesday. [API/S] [EIA/S]
The surprising U.S. inventory build along with lower crude
imports and April's softer export growth in China exacerbated
worries about global oil demand.
"Crude futures were unwinding Tuesday’s modest gains early
Wednesday as economic worries occupied centre stage, especially
over the world’s two largest economies," said Vandana Hari,
founder of oil market analysis provider Vanda Insights.
The market is awaiting U.S. consumer price index (CPI) figures
for April on Wednesday.
New York Fed President John Williams said inflation remains too
high and the central bank will raise rates again if necessary,
even though the Federal Reserve dropped guidance about the need
for future hikes.
The market is also awaiting the monthly oil report from the
Organization of the Petroleum Exporting Countries (OPEC) on
Thursday for clues on whether the group and its allies will need
to cut output again to prop up prices.
OPEC and its allies, together known as OPEC+, agreed last month
to cut production by 1.16 million barrels per day (bpd) from May
through to the end of the year.
Meanwhile, markets were monitoring U.S. President Joe Biden and
top Republican lawmakers' comments on raising the $31.4 trillion
U.S. debt ceiling, fearing an unprecedented default if Congress
does not act in the next three weeks.
(Reporting by Noah Browning; Additional reporting by Stephanie
Kelly and Muyu Xu; Editing by David Goodman and Louise Heavens)
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