May 10, 2023 (MLN): Oil prices fell on Wednesday as concerns over demand arose from an unexpected increase in U.S. oil inventories.
Moreover, market participants are closely monitoring the upcoming U.S. inflation data due at 05:30pm Pakistan standard time today.
Brent crude fell by 1.33% to $76.09 per barrel, while West Texas Intermediate crude (WTI) shed 1.44% to $72.43 per barrel, bringing an end to a three-day rally.
U.S. crude inventories rose by 3.6 million barrels in the week ended May 5, while gasoline stockpiles rose by 399,000 barrels, as reported by Reuters.
Priyanka Sachdeva, an analyst from Phillip Nova Pte Ltd, oil investors should pay attention to indicators of the U.S. economy’s health.
Sachdeva expressed a pessimistic view, stating that, in her opinion, the current economic situation appears dim and bleak.
Notably, New York Fed President John Williams emphasized that inflation remains excessively high, stating that the central bank would not hesitate to raise rates again if necessary.
Despite the commitment of reducing production by 500,000 bpd starting in May, Saudi Arabia notified Asian buyers that it will meet their full crude oil volume requirements for June.
Market participants were also monitoring comments from U.S. President Joe Biden and leading Republican lawmakers regarding raising the U.S. debt ceiling yesterday, which currently stands at $31.4 trillion.
Both Biden and House of Representatives Speaker Kevin McCarthy engaged their aides in daily discussions to explore areas of potential agreement, as a default becomes a looming possibility as early as June 1.
Additionally, OPEC is expected to release its latest monthly oil market report on Thursday, providing an updated assessment of the demand and supply outlook.
