(Bloomberg) — Oil fell after a report pointed to a build in stockpiles and investors backed away from risk assets on concern the U.S. may default.

After a Tuesday reverse of gains, West Texas Intermediate fell more than 1 percent to close narrowly below its previous levels. According to the American Petroleum Institute, which is funded by industry, stockpiles increased by over 4 million barrels. This would have been the first nationwide increase in inventories for eight weeks, if government data confirms it later Wednesday.

Oil’s setback interrupts a rally underpinned by signs the global market was tightening as demand rebounded from the pandemic, and by strong gains in . The advance had lifted global crude benchmark above $80 a barrel for the first time in three years, before it too reversed gains Tuesday. 

While’s there’s a pause for now, “oil prices will remain supported and elevated,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. “The stocks, especially in the U.S., are still quite tight. If global stocks deplete further, we can see Brent going even higher toward $85.” 

During a Senate hearing, Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen both warned that a U.S. default due to a failure to increase the debt ceiling would have catastrophic consequences. Yellen claimed that the cash shortage in her department could occur as soon as Oct. 18 if she doesn’t act. Investors became more cautious and global equity and commodity prices fell.

Governments are concerned by the rise in oil prices this month, which has fueled speculation that the Organization Petroleum Exporting Countries (OPEC) and its allies might ease restrictions on supply at a quicker pace. Jen Psaki, White House press secretary, said Tuesday that they continue to discuss with international partners such as OPEC the importance and necessity of competitive markets. She also stated that setting prices, doing more for the recovery and ensuring transparency are all important.

People familiar with API data say that stockpiles in America increased last week. They included crude stored at Cushing (Oklahoma) as well. For the second week in a row, gasoline holdings increased by 3.6 Million barrels while distillates inventories grew 2.5 million barrels.

Brent’s prompt timespread narrowed for a third day, suggesting traders are becoming more cautious. From 86 cents last week, the gap between two closest contacts was 73 cents per barrel in backwardation. 

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