Oil is falling on demand concerns after a sudden increase in US inventories

Oil prices fell for a second day on Wednesday after a surprise rise in US crude inventories raised concerns about demand in the wake of weaker-than-expected economic data from the United States and China, the world’s two largest oil consumers.

Brent crude futures fell 29 cents, or 0.4 percent, to $74.60 a barrel. US West Texas Intermediate crude also fell 32 cents, equivalent to 0.4 percent, to $70.55, at 0005 GMT.

US crude inventories rose by about 3.6 million barrels in the week ending May 12, according to market sources, citing figures from the American Petroleum Institute. Seven analysts polled by Reuters had expected a decline of 900,000 barrels.

This added to growth concerns in the United States, which were sparked by data showing retail sales rose 0.4% in April, less than estimates for a 0.8% increase.

Talks about raising the US debt ceiling also continue to influence the market. The US Treasury has estimated that the US will default as early as June 1 if Congress does not raise the debt ceiling.

In China, April industrial production and retail sales grew below expectations, indicating that the economy has lost momentum at the start of the second quarter.

Meanwhile, the markets are closely watching any steps related to expanding sanctions on Russia that the G7 leaders may take when they meet in Japan on May 19-21.

Officials with direct knowledge of the discussions said the G7 is looking to target evasion of sanctions involving third countries, with the aim of limiting Russia’s future energy production and curbing trade that supports its military.

Separately, the European Union’s foreign policy chief, Josep Borrell, told the Financial Times that the bloc should crack down on India, which resells Russian oil to Europe as refined fuel.

Indian Prime Minister Narendra Modi plans to attend the G7 summit as a guest and will meet with Biden.

Oil prices fell even as the International Energy Agency raised its forecast for global oil demand this year by 200,000 bpd to a record 102 million bpd.