By Ambar Warrick
Investing.com–Oil prices moved in a flat-to-low range on Wednesday as mixed U.S. inflation data brewed more uncertainty over monetary policy headwinds this year, while signs of another massive build in crude inventories also weighed on prices.
data for January showed inflation remained stickier than expected, a trend that is expected to give the Federal Reserve more impetus to keep raising interest rates. Markets fear that more pressure from interest rates and relatively high inflation could severely crimp economic growth later this year, weighing on crude demand.
were flat at $85.39 a barrel, while fell 0.2% to $78.92 a barrel by 20:26 ET (01:26 GMT). Both contracts were nursing losses of over 1% for the week.
Also pressuring crude markets was data from the that showed U.S. crude stockpiles grew over 10 million barrels in the week to Feb. 10. The reading usually heralds a similar trend in data from the (EIA) due later in the day, and will mark an eighth consecutive week of builds in U.S. inventories.
The EIA is forecast to report a crude stockpile build of 1.166 million barrels, compared to a 2.423 million build in the prior week.
The build comes amid soft demand for fuel and due to an unseasonably warm winter. But the warm weather is also expected to bring in debilitating winter storms in several parts of the country, which could further dent fuel demand.
The rising stockpiles, coupled with the Biden Administration’s planned sale of 26 million barrels from the Strategic Petroleum Reserve, points to a growing supply glut in the world’s largest oil consumer, which is expected to limit any major upside in crude prices.
Oil prices have struggled so far this year amid signs of a middling economic recovery in China and increased U.S. supply. But markets are still holding out for a rebound in Chinese demand, which is expected to drive global crude consumption to a record high later this year.
The Organization of Petroleum Exporting Countries raised its 2023 oil demand forecast by 100,000 barrels per day in its monthly report, citing a Chinese demand rebound after the country lifted anti-COVID restrictions.
Losses in crude prices were also somewhat eased by weakness in the dollar, which fell further from a five-week high following the inflation data.