Oil prices declined by 1% on Wednesday, reversing a three-day rally, as industry data showed rising U.S. crude stockpiles, while the Federal Reserve signaled a slower pace of interest rate cuts this year.
Brent crude fell 67 cents (0.87%) to $76.33 per barrel, while West Texas Intermediate (WTI) declined 75 cents (1.02%) to $72.57 per barrel. The drop comes after three consecutive sessions of gains, with Brent rising 3.6% and WTI increasing 3.7%.
Federal Reserve Chair Jerome Powell said on Tuesday that the U.S. economy remains strong, and the Fed is not in a rush to cut interest rates, though it will act if inflation slows or labor market conditions weaken. Higher interest rates typically increase borrowing costs, which can reduce economic activity and lower oil demand.
American Petroleum Institute (API) data reported a 9.4 million barrel increase in U.S. crude stockpiles for the week ending February 7. Gasoline inventories declined by 2.51 million barrels, while distillate stocks dropped by 590,000 barrels.
The Energy Information Administration (EIA) will release official inventory data later on Wednesday.
Investors are awaiting U.S. consumer price index (CPI) data with forecasts indicating core inflation may slow to 3.1% annually, while the headline rate is expected to remain at 2.9%.
Meanwhile, the EIA increased its U.S. crude production estimate, projecting output to reach 13.59 million barrels per day in 2025, up from its previous forecast of 13.55 million bpd, while leaving its demand forecast unchanged.
