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Oil Down Over Surprise Build in U.S. Crude Oil Supplies, Possible U.S. Default By


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By Gina Lee – Oil was down Wednesday morning in Asia as investors digested a surprise build in U.S. crude oil supplies.

slid 1.47% to $77.20 by 12:31 AM ET (4:31 AM GMT) and fell 1.53% to $74.14.

, released on Tuesday, showed a of 4.127 million barrels for the week ending Sep. 24.’s forecasts predicted a draw between 2.333 and 6.108 million barrels.

Investors are now waiting for, which is due late in the afternoon. It would mark the eighth consecutive week of inventory increases in the United States if EIA data is confirmed.

The surprise build halted the black liquid’s recent rally that was supported by a tightening global market as China, the world’s top oil exporter faces an energy crunch. Increasing fuel demand as economic recovery from COVID-19 continues, and strong gains in also contributed to the rally.

Although there is a pause for now, “oil prices will remain supported and elevated,” Oversea-Chinese Banking Corp. economist Howie Lee told Bloomberg.

“Stocks, especially in the U.S., are still quite tight. If global stocks deplete further, we could see Brent futures going even higher toward $85.”

Meanwhile, concerns are also growing about a debt-ceiling impasse in the U.S. after Republicans in the Senate blocked a Democrat move to raise the debt limit.

In testimony before the Senate Banking Committee on Tuesday, U.S. Federal Reserve Chairman Jerome Powell as well U.S. Treasury secretary Janet Yellen warned of a catastrophic default if there is no action to increase the debt limit. Both will be testifying before the House Banking Committee on Thursday.

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