Crude oil prices drifted lower on Wednesday after data showed a jump in oil inventories in the U.S. last week, and the Federal Reserve hiked interest rates by a sharp 0.75%.
The Fed today raised its target interest rate by 75 basis points to fight inflation.
Data released by the Energy Information Administration (EIA) earlier in the day showed oil inventories in the U.S. rose by 2 million barrels last week to 418.7 million barrels, against expectations for a 1.3 million-barrel drop.
The data also showed gasoline stockpiles dropped by 0.7 million barrels last week, against expectations for a 1.1 million-barrel rise, while distillate stockpiles rose by 0.7 million barrels, more than twice the expected increase.
West Texas Intermediate Crude oil futures dropped by $2.21 or about 1.8% to $116.72 a barrel.
Brent crude futures were down $2.01 or 1.65% at $119.16 a barrel a little while ago.
The Fed raised the target rate for the federal funds rate by 75 basis points to 1.50 to 1.75%, marking the biggest rate hike since 1994.
The widely expected move by the Fed comes as a recent report from the Labor Department showed consumer price inflation at the fastest annual rate in forty years.
Citing its goals of maximum employment and inflation at a rate of 2 percent over the longer run, the Fed also indicated that further rate hikes are likely to be appropriate.
The Fed also said it will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities.
The central bank said overall economic activity appears to have picked up after edging down in the first quarter. It described recent jobs gains as “robust” and noted the unemployment rate has remained low.
“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures,” the Fed said.
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