By Ambar Warrick
Investing.com-- Oil prices fell on Wednesday, extending overnight losses after industry data showed U.S. crude stockpiles grew more than expected in the past week.
Investors were also wary of upcoming U.S. CPI inflation data, which could point to more rate hike risks from the Federal Reserve.
As of 2045 ET (0030 GMT), Brent Oil Futures fell 0.4% to $96.09 a barrel, while U.S. Crude Oil WTI Futures shed 0.3% and traded at $90.22. Both contracts had fallen on Tuesday, albeit slightly, as a potential supply crunch in Europe briefly supported prices.
Data from the American Petroleum Institute showed that U.S. oil inventories grew more than expected in the prior week. Stocks of crude oil, gasoline, and distillates stood at 2.16 million barrels, compared with a forecast of less than 100,000 barrels. The reading likely foreshadows a similar figure from official data due later in the day- which would mark a second straight week of unexpectedly large U.S. oil inventories.
Oil prices had plummeted last week after data showed the U.S. held crude inventories of over 4 million barrels, which was in contrast to expectations for a contraction in stockpiles.
The readings indicate that U.S. oil demand is weakening in the face of rising inflation and slowing manufacturing- which could spell more trouble for crude markets.
Slowing factory activity across the globe is also expected to weigh on crude demand in the coming months. Oil has plummeted over $40 from peaks hit when Russia began its invasion of Ukraine, as rising cost pressures across the globe severely dented demand.
Focus now turns to the upcoming U.S. inflation data, due at 0830 ET. While the reading is expected to show a mild decline in prices from last month, inflation is still expected to remain underpinned around 40-year highs.
This in turn will likely push the Fed into hiking rates further in September- a move that could weigh on economic activity and further dent oil prices.