Investing.com-- Oil prices fell in Asian trade on Wednesday, cutting short a recent rebound as industry data showed an unexpected increase in U.S. inventories.
But prices were sitting on strong gains over the past week as persistent supply disruptions from Hurricane Francine and the prospect of lower rates saw traders pile into crude at heavily discounted levels.
An escalation in Middle East tensions also helped spur some demand for crude, as Hezbollah vowed retaliation against Israel after accusing it of detonating pagers across Lebanon this week.
Brent oil futures fell 0.4% to $73.41 a barrel, while West Texas Intermediate crude futures fell 0.4% to $69.69 a barrel by 21:17 ET (01:17 GMT). Both contracts rose sharply from near three-year lows over the past week.
US inventories unexpectedly increase- API
Data from the American Petroleum Institute showed U.S. oil inventories saw an unexpected build in the week to September 13.
Inventories grew by 1.96 million barrels, compared to expectations for a draw of 0.1 mb and a 2.79 mb draw from the prior week.
The reading comes after official data last week showed a build in U.S. inventories, indicating that demand in the world’s biggest fuel consumer was cooling with the end of the travel-heavy summer season.
The API data usually heralds a similar reading from official inventory data, which is due later on Wednesday. The unexpected build also indicates limited, actual disruptions to production from Hurricane Francine, which barreled through the Gulf of Mexico last week.
Demand concerns, rate cuts in focus
Chinese markets reopened on Wednesday after an extended holiday, with local traders reacting to a barrage of weak economic readings from the country.
The readings had ramped up concerns over slowing growth in the world’s biggest oil importer, which could potentially dent its appetite for crude.
Markets were also on edge before the conclusion of a two-day Federal Reserve meeting later in the day, where the central bank is widely expected to cut interest rates for the first time in over four years.
Markets are split between expectations for a 25 or 50 basis point reduction.
Anticipation of Wednesday's decision pulled down the dollar, which helped spur some gains in crude.