Oil growth stalled due to unexpected rise in US inventories, Fed in focus

On Wednesday, oil prices halted growth, driven by data on lower inflation in the United States due to an unexpected increase in fuel inventories. At the moment, the focus is on the Federal Reserve meeting.

Oil prices rose more than 2% on Tuesday after US consumer inflation eased in November. The consumer inflation eased more than expected. The data pointed to the peak of price pressure in the country, which led to the weakening of the dollar and a rise in the cost of crude.

Lower consumer inflation bodes well for US retail fuel purchases, a major demand driver.

Special attention is drawn to the Fed meeting. The bank is expected to raise interest rates by 0.5%. However, markets are focused on any possible change to the bank’s hawkish stance on inflation.

A recently released API report showed that United States oil inventories rose nearly 8 million barrels in the week to December 9. Thus, the expectations of a draw in oil reserves by 3.9 million barrels were subverted.

This report likely heralds a similar trend in official government data from the Energy Information Agency (EIA) due later in the day. According to forecasts, EIA figures will indicate a drop in oil inventories by 3.6 million barrels.