Crude oil storage tanks on the Juaymah Tank Farm in Saudi Aramco’s Ras Tanura oil refinery and oil terminal in Saudi Arabia, in 2018.

Simon Dawson | Bloomberg | Getty Images

Oil prices fell on Wednesday, erasing the previous session’s gains, after industry data showed an unexpected construct in crude and fuel inventories in the USA, the world’s biggest oil user, which reignited worries about fuel demand.

U.S. West Texas Intermediate (WTI) crude fell 59 cents, or 0.8%, to $74.53 a barrel at 0134 GMT, while Brent crude futures were down 62 cents, or 0.8%, at $79.48 a barrel.

U.S. crude stocks jumped by 14.9 million barrels within the week ended Jan. 6, sources said, citing data from the American Petroleum Institute (API). At the identical time, distillate stocks, which include heating oil and jet fuel, rose by about 1.1 million barrels.

Analysts polled by Reuters expected crude stocks to fall by 2.2 million barrels and distillate stocks to drop by 500,000 barrels.

Traders will probably be searching for inventory data from the U.S. Energy Information Administration due afterward Wednesday to see if it matches the preliminary view from API.

The oil market has been pulled lower by worries about U.S. rate of interest hikes to curb inflation which might trigger a recession and curtail fuel demand, offsetting hopes for fuel demand growth in China, the world’s second largest oil consumer, because it eases Covid curbs and resumes international travel.

“Monday’s news that China had issued a fresh batch of import quotas suggests the world’s large importer is ramping up to satisfy higher demand,” ANZ Research analysts said in a note.

The large focus this week is on U.S. inflation data, due on Thursday. If inflation is available in below expectations that will drive the dollar down, analysts said. A weaker dollar can boost oil demand because it makes the commodity cheaper for buyers holding other currencies.