Oil falls on build in U.S. crude oil stocks, stronger dollar

MELBOURNE  – Oil prices fell in early trade on Wednesday as the dollar firmed and as industry data showing U.S. crude oil stockpiles rose more than expected reinforced fears of a global recession that would cut demand.

Brent crude futures for December dropped $1.17, or 1.3 percent, to $92.35 a barrel at 0111 GMT, after climbing 26 cents in the previous session.

U.S. West Texas Intermediate (WTI) crude futures for December delivery were down 88 cents, or 1 percent, to $84.44 a barrel, reversing the previous session’s gain.

“The prospect of a global economic slowdown and tighter monetary policy has been outweighing the spectre of supply reductions in recent weeks,” ANZ Research analysts said in a note.

U.S. crude inventories rose by about 4.5 million barrels in the week ended Oct. 21, according to market sources citing figures from the American Petroleum Institute, an industry group.

That was higher than expectations from five analysts polled by Reuters, who on average had expected a build of about 200,000 barrels.

At the same time, API data showed distillate stocks, which include diesel, heating oil and jet fuel, rose by about 600,000 barrels against analysts’ estimates for a drawdown of 1.1 million barrels.

However, gasoline inventories fell by about 2.3 million barrels, nearly double the decline that analysts had expected.

Official U.S. stockpile data from the government’s Energy Information Administration is due on Wednesday at 1430 GMT.

A stronger dollar also weighed on the market. The dollar index, which measures the greenback against six major peers, inched up to 111.02.

A firmer dollar dampens demand for oil as it makes crude more expensive for those holding other currencies.

While smarting from the recent decision by the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together called OPEC+, to cut oil output, the White House on Tuesday welcomed moves by Saudi Arabia to help Ukraine in its war with Russia.

U.S. President Joe Biden, worried that gasoline prices will jump ahead of Nov. 8 congressional elections, has warned the Saudis would face consequences for aligning with Russia and agreeing to reduce crude supply.