Oil prices fell slightly on Thursday, pressured by strength in the dollar following hotter-than-expected U.S. consumer inflation, which ramped up bets on more interest rate hikes.

Focus was now on an upcoming meeting of the International Energy Agency on Thursday, which is likely to dictate the speed at which Europe will release more oil from its emergency stockpiles.

Brent oil futures fell 0.5% to $105.56 a barrel by 20:09 ET (00:09 GMT), while West Texas Intermediate crude futures fell 0.35% to $94.76 a barrel.

Oil’s losses were limited by industry data showing U.S. oil inventories shrank much more than expected in the past week amid disruptions in production along the Gulf coast.

Crude retained a bulk of its gains from earlier in the week, as renewed strikes in the Strait of Hormuz and worsening hostilities between Saudi Arabia and Yemen’s Houthis kept fears of supply disruptions in play.

Oil falls as CPI data boosts dollar
Oil pared a bulk of its gains on Wednesday after U.S. consumer price index inflation data read stronger than expected for September.

The print buoyed the dollar and Treasury yields, and spurred deep losses in global financial markets.

Sticky inflation data spurred increased bets that the Federal Reserve will raise interest rates again before the year-end– a scenario that could quash economic growth and hurt oil demand.

Oil was also pressured by anticipation of an IEA meeting, where the agency is expected to clarify recent comments from member states regarding an additional 100 million barrel release.

IEA members had earlier this year pledged to release 400 million barrels of oil from emergency reserves, due to the U.S.-Iran war. Recently, some ministers touted an additional 100 million barrel release.

The agency, in a monthly report released on Wednesday, warned that global diesel markets could remain tight well into 2027 due ongoing crude supply disruptions and refinery outages.

But the agency also forecast overall global oil demand falling by 2.6 million barrels per day in 2026, due to pressure from higher prices.

The IEA will meet in Paris later in the day.

Elsewhere, data from the American Petroleum Institute showed U.S. oil inventories fell by 11.12 million barrels in the week to October 9.

The surprise draw came as U.S. Gulf coast production was disrupted by Hurricane Isaias, which made landfall in the region late last week. The hurricane was seen taking nearly two-thirds of Gulf production offline.

The API data usually heralds a similar trend in official inventory data, which is due later on Thursday

Source: Investing.com.

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