Oil prices fell in early trade on Wednesday after industry data showed a big build in U.S. crude inventories, rather than the decline forecast by analysts, reinforcing fears about weakening demand even as supply tightens. U.S. West Texas Intermediate (WTI) crude futures fell 30 cents, or 0.4%, to $75.09 at 0128 GMT, paring a 3% gain from the previous session.
Brent crude futures dropped 38 cents, or 0.5%, at $80.30 per barrel. U.S. crude inventories rose by about 7.8 million barrels in the week to Dec. 9, according to market sources citing data from the American Petroleum Institute, while analysts polled by Reuters had expected a 3.6 million barrel drop in stocks.
The inventory data defied bullish sentiment which sent the market up 3% in the previous session on hopes of a revival in Chinese demand with the easing of COVID-19 restrictions and on a weakening dollar after data showed U.S. inflation subsiding.
ANZ Research analysts, citing data from Chinese firm VariFlight, highlighted signs of domestic travel picking up in China, with flight activity having surged to around 65% of pre-pandemic levels on Monday, up from 22% on Nov. 29.
The market has also been supported this week by the outage of TC Eenrgy Corp’s Keystone Pipeline, which ships 620,000 barrels per day of Canadian crude to the United States.