© Reuters.
Investing.com– Oil prices fell in Asian trade on Wednesday after industry data pointed to an outsized build in inventories, while markets were also reeling from a hot inflation reading that further dented bets on early rate cuts by the Federal Reserve.
Still, bigger declines in crude were held back by persistent geopolitical tensions in the Middle East and Russia, while U.S. fuel supplies also remained tight as local refineries remained shut for maintenance.
Iranian media reported an explosion and a fire at a key gas pipeline in Borujen County, although the cause of the explosion remained unclear.
Oil prices were due for some profit-taking following a strong run-up over the past two weeks, after Israel rejected a Hamas ceasefire proposal, and Ukraine launched strikes against several key Russian fuel export terminals.
expiring in April fell 0.5% to $82.36 a barrel, while fell 0.5% to $77.20 a barrel by 20:27 ET (01:27 GMT). Both contracts remained in sight of a two-week high.
Strength in the also weighed on oil prices. The greenback shot up to a three-month high after data on Tuesday showed U.S. (CPI) inflation remained sticky in January.
Sticky inflation gives the Fed more cause to keep interest rates higher for longer- a trend that is expected to stymie economic activity and potentially curb oil demand in the coming months.
Still, the Organization of Petroleum Exporting Countries (OPEC) kept its outlook for global crude demand unchanged in a released on Tuesday. But the report also showed that only some of its members fully committed to new production cuts, indicating that oil supplies were likely to be less tight than expected in the coming months.
A from the International Energy Agency is due later this week.
US inventories surge, but fuel supplies remain tight- API
Data from the American Petroleum Institute (API) showed U.S. grew by 8.5 million barrels in the week to February 9, much more than estimates for an increase of 2.6 million barrels.
The potential jump in inventories comes as U.S. oil output roared back to record highs of over 13 million barrels earlier in February, as the impact of a cold snap on production now appeared to be easing.
But U.S. fuel and distillates supplies remained constrained by refinery closures. Gasoline inventories shrank by 7.2 million barrels, while distillate stockpiles fell 4 million barrels.
The API data usually heralds a similar trend from , which is due later on Wednesday.
But the large build in overall inventories likely indicates that U.S. production remained strong in the past week. High U.S. production has been a pain point for oil prices, given that it is likely to keep markets well supplied despite OPEC attempts to tighten global supplies.
