April 13, 2023 (MLN): Oil prices took a downward turn on Thursday, following two consecutive sessions of gains, as investors held concerns regarding the likelihood of a U.S. economic recession and decreased demand for oil.
During the early Asia trading session, Brent crude dropped 23 cents, or 0.27%, to $86.66 a barrel, while U.S. West Texas Intermediate (WTI) slid 22 cents, or 0.26%, to $83.00.
On Wednesday, both benchmarks had increased 2%, reaching their highest levels in more than a month, as cooling U.S. inflation data prompted hopes that the Federal Reserve would stop hiking interest rates.
According to Yeap Jun Rong, a market strategist at IG, the outlook for oil demand is uncertain due to the risk of a U.S. recession, as revealed by the latest Fed minutes. He also added that the supply conditions are tight enough to offset this effect for now, Reuters reported.
The U.S. Consumer Price Index (CPI) increased by 0.1%, which was below the 0.2% gain predicted by economists. It was also down from the 0.4% increase observed in February. As a result, there are expectations that the Fed may stop hiking rates after a possible increase in May.
Despite a slight increase in U.S. crude oil stocks, which was partly attributed to a congressionally mandated release of oil from the U.S. emergency reserve and lower exports at the start of the month, markets remained unshaken on Wednesday.
Energy Information Administration (EIA) data showed that crude inventories rose by 597,000 barrels last week. In contrast, gasoline and distillate stocks drew down less than expected.
