On Wednesday morning, oil slumps further after reports of a substantial rise in US commercial crudes inventories. Investors hold their breath trying to figure out how much higher the Federal Reserve will raise interest rates as a result, and on top of that, inflation was higher than expected, as evidenced by Tuesday’s report on US consumer prices.

A barrel of European benchmark crude Brent trades at USD 85.87 on Wednesday morning against USD 85.31 on Tuesday afternoon. US counterpart West Texas Intermediate futures sell at USD 78.39 against USD 78.71 on Tuesday afternoon.

On Tuesday evening, the industry-funded American Petroleum Institute reported that US commercial crude inventories rose by 10.5 million barrels last week, writes Bloomberg News.

The figure markedly exceeds analysts forecasts of a 2-million-barrel rise. Official US crude inventory data will release later today.

This week, oil has struggled despite Russia’s plan to curb supply flows as sanctions take hold amid escalations in Ukraine, and signs of Chinese refineries picking up oil cargoes as activities go up.

A US plan for a sale of crude from the Strategic Petroleum Reserve has weighed down prices, while expectations of higher US interest rates and a stronger dollar reduced the appeal of risk commodities like oil.

“The direction of travel in the near term looks more south than north,” says Vishnu Varathan, head of Asia economics and strategy at Mizuho Bank Ltd. According to him, factors like more heightened interest-rate expectations are behind those developments, reports Bloomberg News.