The Energy Information Administration reported a buildup of 4.1 million barrels in US crude stocks last week to a total of 427.9 million barrels, while analysts expected a rise of 2.4 million barrels. 

Gasoline stocks rose 3 million barrels to 248.1 million barrels, while distillate stocks rose 0.1 million barrels to 118.6 million barrels. 

US stock indices fell on Wednesday as US treasury yields declined following inflation data.

Earlier government data showed US consumer prices rose 0.5% m/m in January, and 3% on a yearly basis, striding beyond estimates.

Federal Reserve Chair Jerome Powell said during his biannual Congressional testimony ahead of the Senate that US inflation remains above the 2% target, but he praised the recovery of the US economy, and noted the durable strength of the labor sector. 

He asserted the Fed’s continuous mission to combat inflation, adding that Fed officials are not in a hurry to cut interest rates.

On trading, Dow Jones fell 0.9% as of 16:21 GMT, or 401 points to 44,192 points, while S&P 500 shed 0.7%, or 41 points to 6027 points, as NASDAQ gave up 0.5%, or 100 points to 19,544 points. 

Global oil prices fell in American trade on Wednesday for the first time in four days away from two-week highs on profit-taking after a surge in US crude stocks according to initial data.

Now traders await the final results from the EIA later today, expected to show an inventory buildup for the third week in a row. 

Prices are also pressured by a surge in trading volumes after the release of strong US inflation data, which reduced the odds of a Fed rate cut in March.

Prices

US crude fell 1.2% today to $72.25 a barrel, with a session-high at $73.19.

Brent rose 1.0% on Tuesday, marking the third profit in a row, with a two-week high at $73.64, while Brent added 1.1% on Tuesday, hitting January 28 highs at $77.25.

The gains are due to concerns about a shortage in global supplies as Russian and Iranian exports suffer from fresh US sanctions. 

US Stocks 

Initial data from the American Petroleum Institute reported a rise of 9 million barrels in the US crude stocks last week, marking the fourth weekly rise in a row and passing estimates of a 2.8 million barrels buildup.

According to the data, total US crude stocks are now up to 434.2 million barrels, the highest since mid-November, in a negative sign for demand in the US.

Now traders await official data from the EIA later today, still expected to show a buildup of 2.4 million barrels last week.

US Dollar

The dollar index rose over 0.5% on Wednesday to a week high at 108.52 against a basket of major rivals.

US consumer prices rose unexpectedly in monthly and yearly readings in January, indicating renewed inflationary pressures on Fed policymakers.

According to the Fedwatch tool, the odds of a 0.25% Fed rate cut at the March meeting fell to just 2.5%.

The US dollar fell in European trade on Wednesday for the second session away from a week high on profit-taking, with the losses curbed by the higher US 10-year treasury yields following bullish remarks from Fed Chair Jerome Powell ahead of Congress. 

The remarks tanked the odds of a Fed rate cut in March, with investors now waiting for US inflation data later today to gather more clues.

The Index

The dollar index edged lower 0.1% today to 107.89, with a session-high at 108.10.

On Tuesday, the index lost 0.4%, the first loss in four days away from a week high at 108.46.

US Yields 

US 10-year treasury yields rose 0.9% on Wednesday, on track for the fifth profit in a row, hitting a week high at 4.554% and underpinning the greenback.

Powell

Federal Reserve Chair Jerome Powell said during his biannual Congressional testimony ahead of the Senate that US inflation remains above the 2% target, but he praised the recovery of the US economy, and noted the durable strength of the labor sector. 

He asserted the Fed’s continuous mission to combat inflation, adding that Fed officials are not in a hurry to cut interest rates.

He noted that monetary policies are less restrictive now than before, and the economy remains strong, so the need to accelerate rate cuts isn’t there. 

Following his remarks, the odds of a Fed March 0.25% interest rate cut fell even further to just 4.5%.

Later today, US consumer prices data will be released, and are expected to be up 2.9% y/y in January, while core prices are estimated up 3.1%.