Oil prices declined on Wednesday in Asian trade after data from the American Petroleum Institute (API) showed an unexpected inventory increase last week, disputing a tighter outlook for the near term.
Global benchmark Brent crude oil futures expiring in June traded 0.81% lower at $84.94 per barrel, while the US benchmark West Texas Intermediate (WTI) crude futures for May fell 0.97% to $80.83 per barrel.
Adding to oil prices’ woes was the ongoing strength of the US dollar, which has driven prices away from four-month peaks reached earlier this month. Significant moves in crude also came amid weaker trading before the Good Friday holiday.
The prospect of tighter markets after Russian supply cuts, Middle East disruptions, and more refinery operations has enabled crude prices to reach their highest levels in four months.
Traders are currently awaiting further hints about the US inflation and interest rates from the Federal Reserve.
US Crude Inventories Post Unexpected Build Last Week
The API reported on Tuesday that US crude supplies made a surprising build in the week earlier, coming in contrast to the two straight weeks of considerable decreases in March as refining businesses continued to bounce back.
Crude inventories in the country rose 9.3 million barrels for the week ending March 22, compared with a 1.5-million-barrel reduction logged in the previous week. The reading was also above economists’ forecast of a 1.2-million-barrel drop.
The API data typically presents a similar trajectory in the Energy Information Administration’s (EIA) inventory reading, set to be released later Wednesday. The data is seen weekly stockpiles trimming around 1 million barrels last week.
However, Tuesday’s data has created some uncertainty over the rigidity of US oil markets, especially when output is still at record highs of more than 13 million barrels per day (bpd). Should the reading raise doubts over a tighter outlook, crude is expected to experience some profit-taking.
Still, world fuel markets are anticipated to stay tight, especially as Russia rein in gasoline output following Ukraine’s airstrikes on its oil refineries.
