Oil prices have declined on Wednesday as industry data showed an increase in crude and fuel inventories in the United States, and the U.S. dollar strengthened, indicating weakening oil demand.
Brent crude oil futures fell $1.11, or 1.3%, to $82.05 a barrel, while U.S. West Texas Intermediate (WTI) crude futures dropped $1.15, or 1.5%, to $77.23 a barrel.
The decline in oil prices follows a marginal drop in the previous session, which was attributed to signs of easing supply tightness and weaker global oil demand, as per a forecast report from the U.S. Energy Information Administration (EIA).
According to the American Petroleum Institute (API) data, U.S. crude stocks rose by 509,000 barrels in the week ended May 3. Gasoline and distillate fuel inventories also increased, further weighing on prices.
“API numbers released overnight were moderately bearish due to stock builds in both crude and products… Concern over weaker-than-usual U.S. gasoline demand and this stock build have weighed on the prompt RBOB gasoline crack,” ING analysts said.
The official U.S. government data on stockpiles is expected to be released later on Wednesday, with analysts polled by Reuters expecting a decline of about 1.1 million barrels in U.S. crude oil inventories last week.
Additionally, a stronger U.S. dollar, which makes oil more expensive for holders of other currencies, has also contributed to the decline in oil prices.
Hopes of a ceasefire in Gaza have also put pressure on oil prices in recent sessions, with some analysts saying the risk premium on oil had declined. However, cautious expectations on supply cuts from the Organization of the Petroleum Exporting Countries and its allies (OPEC+) ahead of a June 1 policy meeting have also weighed on the market.