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NEW YORK: Oil prices were little changed on Wednesday in another volatile session, after U.S. oil inventories rose and after U.S. inflation figures bolstered the case for another big Federal Reserve interest rate increase.

Brent crude was down 6 cents to $99.43 a barrel as of 11:36 a.m. ET (1536 GMT), while U.S. West Texas Intermediate crude rose 30 cents to $96.14 a barrel.

Investors have been selling oil of late on worries that aggressive rate hikes to stem inflation will slow economic growth and hit oil demand. Prices fell by more than 7% on Tuesday in volatile trade to settle below $100 for the first time since April.

However, the physical market remains tight. Key benchmarks, such as Forties crude and U.S. Midland crude, are trading at premiums to the futures market, painting a different picture than what is happening in futures.

Brent oil may test support of $103.67

“Demand issues are catching up to high prices. The U.S. dollar is causing downside pressure on all commodities. There’s been a shift in mentality over the last couple of weeks,” said Tony Headrick, energy markets analyst at CHS Hedging.

This week, both the Organization of the Petroleum Exporting Countries and International Energy Agency, in monthly reports, warned that demand was weakening, particularly in the largest world economies.

U.S. oil inventories rose more than expected in a mild respite from the tightness in markets. U.S. commercial crude stocks rose by 3.3 million barrels, government data showed, versus expectations for a modest draw in stocks.

Investors remain concerned about recent weakness in fuel demand worldwide that is also emerging in the United States.

U.S. consumer prices accelerated to 9.1% in June as gasoline and food costs remained elevated, cementing the case for the Federal Reserve to hike interest rates by 75 basis points later this month.

Brent is down sharply since hitting $139 in March, which was close to the all-time high in 2008. Renewed COVID-19 curbs in China have weighed on the market this week.

The decline in crude futures has yet to be reflected in the strong physical oil market. Forties crude, one of the grades underpinning Brent futures, was bid at a record high premium to the benchmark of plus $5.35 a barrel on Tuesday.

U.S. Midland crude was at a premium of $1.50 a barrel to WTI, also reflecting tightness but that grade was below premiums reached in late February after Ukraine was invaded.

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