Adedapo Adesanya
By Adedapo Adesanya
Oil prices fell by more than 1 per cent a barrel on Wednesday, ending a three-day rally, as economic data suggested that the US Federal Reserve might hike interest rates further.
Brent crude dropped $1.03 or 1.3 per cent to settle at $76.41 per barrel yesterday, as the US West Texas Intermediate crude (WTI) fell by $1.15 or 1.6 per cent to $72.56 per barrel.
US consumer prices rose in April, potentially raising the likelihood that the Fed will maintain higher interest rates.
April consumer prices index in the world’s largest economy climbed 4.9 per cent from a year ago, which was less than the 5 per cent gain anticipated by economists. Month-over-month inflation matched expectations with a 0.4 per cent increase in April.
Rising global interest rates have weighed on oil prices in recent months, with traders concerned about recession.
Prices were also pressured after the Energy Information Administration (EIA) reported an inventory build of 3 million barrels for the week to May 5 compared with an inventory draw of 1.3 million barrels estimated for the previous week.
A day before the EIA released its latest figures, the American Petroleum Institute (API) reported a build in inventories of 3.62 million barrels, contrary to expectations of another draw, pressuring prices.
At 462.6 million barrels, U.S. crude oil inventories are 1 per cent below the five-year average for this time of the year.
Traders also monitored the latest updates on the US debt ceiling as worries mount that an agreement may not be reached before June 1, which is the earliest date the Treasury Department says the U.S. could default.
President Joe Biden held a key meeting with congressional leaders on Tuesday, but comments from the leaders suggested that little progress was made.
Mr Biden and Congressional leaders will meet again on Friday.
The US Department of Energy provided some support for prices with an update from Energy Secretary Jennifer Granholm, who said the department still planned to begin refilling the strategic petroleum reserve later this year, although she did not provide any specifics.
