Oil prices fell in morning trading on Wednesday as a large increase in US crude stocks raised demand concerns.
Brent, the benchmark for two thirds of the world’s oil, was trading 1.33 per cent lower at $84.44 a barrel at 11.46am UAE time.
West Texas Intermediate, the gauge that tracks US crude, was down 1.51 per cent at $77.87 a barrel.
US crude inventories rose by 10.5 million barrels last week, according to the American Petroleum Institute.
Meanwhile, analysts polled by Reuters were expecting an increase of 1.2 million barrels in US crude inventories.
Inflation in the US remained elevated on an annual basis for the month of January, boosted by rent and energy prices, indicating that the Federal Reserve's moderate interest rate increases will continue.
The Consumer Price Index overall slowed to 6.4 per cent a year, from 6.5 per cent in the previous month, the smallest annual increase since October 2021, a report from the Bureau of Labour Statistics said.
An Associated Press survey of economists had predicted annual inflation would slow to 6.2 per cent in January.
“No one has strong confidence with their US growth outlook, which means the market could go from pricing in a ‘soft landing’ to a ‘short and shallow’ recession or even a ‘classic recession’,” said Edward Moya, a senior market analyst at Oanda.
Brent prices settled 1.2 per cent lower on Tuesday after the US announced that it would release 26 million barrels of crude oil from its strategic petroleum reserve (SPR).
A record 180 million barrels of oil were released from America’s emergency reserves last year after Russia’s invasion of Ukraine resulted in Brent crude closing in on a 14-year high of $140 a barrel.
“The oil market was supposed to get a little tighter as energy traders were expecting the next move to be refilling the SPR,” said Mr Moya.
On Tuesday, Opec raised its 2023 oil demand forecast by 100,000 barrels per day amid expectations of an economic rebound in China, the world's largest crude importer.
The group expects global oil demand to grow by 2.3 million bpd this year, which is higher than its previous estimate of 2.2 million bpd growth for 2023.
However, Opec said high inflation, monetary tightening, sovereign debt levels and geopolitical tension could weigh on global oil demand prospects.
The International Energy Agency, which expects oil demand to hit record levels this year, will release its monthly oil market report today.
