After a three-day rise, oil prices dropped more than 1% per barrel on Wednesday as economic data indicated that the US Federal Reserve would raise interest rates further.
Yesterday, Brent crude slid $1.03 or 1.3% to close at $76.41 a barrel, while West Texas Intermediate crude (WTI) in the US fell $1.15 or 1.6% to $72.56 per barrel.
US consumer prices increased in April, which could increase the possibility that the Fed will keep interest rates higher.
The world’s largest economy’s consumer price index for April increased by 4.9% from a year earlier, which was less than the economists’ predicted 5% increase. With an increase of 0.4% in April, inflation over the previous month was in line with predictions.
With speculators fearing a recession, rising global interest rates have put pressure on oil prices recently.
The Energy Information Administration (EIA) reported an inventory build of 3 million barrels for the week ending May 5 compared to a projected inventory loss of 1.3 million barrels for the prior week, which also put pressure on prices.
The American Petroleum Institute (API), contrary to anticipation of another draw, recorded a gain in stocks of 3.62 million barrels the day before the EIA issued its most recent data, pushing prices.
U.S. crude oil stocks are 1% lower than the five-year average at 462.6 million barrels, which is the time of year.
As concerns grow that a deal may not be reached by June 1, which is the earliest day the Treasury Department thinks the U.S. might default, traders also kept an eye on the most recent developments regarding the US debt ceiling.
Tuesday’s meeting between President Joe Biden and congressional leaders was crucial, but the leaders’ comments seemed to indicate that not much progress had been accomplished.
On Friday, Mr. Biden will have another meeting with congressional leaders.
Energy Secretary Jennifer Granholm’s report from the US government of Energy, which stated that the government still intended to start replenishing the strategic petroleum reserve later this year without giving any further details, helped to support prices a little bit.
