Crude oil prices sharply lower after surprising build-up of US crude oil and gasoline inventories

Oil prices fell early in trading on Wednesday after industry data showed a surprise increase in US crude inventories, as investors awaited US inflation data for April that could give direction to the Federal Reserve’s next interest rate decision. Brent crude fell 16 cents to $77.28 a barrel at 0008 GMT, while US West Texas Intermediate (WTI) crude fell 20 cents to $73.51, beating gains from the previous session.

As a possible sign of declining demand, U.S. crude oil inventories rose by about 3.6 million barrels in the week ending May 5, while gasoline inventories rose by 399,000 barrels, the American Petroleum Institute reported Tuesday, according to market sources. The data defied expectations of eight analysts polled by Reuters for crude oil inventories to fall by 900,000 barrels and gasoline inventories to fall by 1.2 million barrels.

U.S. government oil inventory data is expected on Wednesday. At the same time, the market is awaiting US consumer price index (CPI) data for April to be released 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 US central bank has dropped guidance on the need for future hikes. In Alberta, Canada’s top oil-producing province, wildfires eased on Tuesday thanks to cooler weather. The wildfires forced oil and gas producers to lock in at least 319,000 barrels of oil equivalent per day (boopd), or 3.7% of the country’s production.

Markets also followed comments from US President Joe Biden and key Republican lawmakers about raising the US debt ceiling to $31.4 trillion amid fears of unprecedented bankruptcy if Congress does not act within three weeks.

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