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Investing.com-- Oil prices fell further in Asian trade on Wednesday, hitting five month lows as traders hunkered down before the final Federal Reserve meeting for the year, while signs of a draw in U.S. inventories offered little support.
Concerns over weaker demand, looser supplies and higher-for-longer interest rates spurred steep losses in oil prices this week, as markets remained averse to crude after underwhelming production cuts from the Organization of Petroleum Exporting Countries and allies (OPEC+) for 2024.
Record-high U.S. production and growing concerns over a slowdown in Chinese demand also weighed on crude, as did uncertainty before more signals on monetary policy from the Fed.
Brent oil futures expiring February fell 0.2% to $73.09 a barrel, while West Texas Intermediate crude futures fell 0.2% to $68.71 a barrel by 20:37 ET (01:37 GMT). Both contracts were at their weakest levels since July.
An underwhelming outlook on oil prices from the Energy Information Administration (EIA) also weighed, as the EIA cut its 2024 Brent forecast by $10 a barrel to $83 a barrel.
US inventories see draw, but gasoline stocks rise- API
Data from the American Petroleum Institute (API) showed that U.S. oil inventories likely fell by a bigger-than-expected margin in the week to Dec. 8.
But the potential draw comes on the heels of several consecutive weeks of strong builds. The API data also showed an outsized, 5.8 million barrel build in gasoline inventories, further signaling a slowdown in U.S. fuel consumption.
The API data usually heralds a similar reading from official inventory data, which is due later in the day, which is expected to show a draw of 1.5 million barrels.
Gasoline inventories are expected to show a 2.4 million barrel increase, while U.S. production is expected to remain near record highs.
High U.S. production, despite a decreasing rig count in the country, has also been a point of contention for oil markets, as the country increased output to fill a gap left by the OPEC.
Fed in focus as US inflation remains sticky
U.S. consumer price index data released on Tuesday showed a mild uptick in month-on-month inflation in November, pushing up concerns that the Fed will maintain its hawkish rhetoric at the conclusion of its final meeting for 2023 later in the day.
While the central bank is widely expected to keep rates on hold, its outlook for 2024, particularly any plans to trim interest rates, will be a key point of focus.
Markets have trimmed expectations for early interest rate cuts by the Fed, given recent signs of sticky inflation and strength in the labor market.
