Oil Prices Spike over Surprise Drawdown in US Stock

Regaining position, crude oil prices inch higher after an unexpected drawdown in United States (U.S) oil stocks after days of losing streak in the global market. Brent crude oil adds 0.2% to $82.86 a barrel, while west texas instrument (WTI) also adds 0.2% to $76.83 a barrel.

U.S. crude inventories fell by 1.7 million barrels, contrary to analysts’ forecasts of a 700,000-barrel build. The decrease halts a ten-week streak of inventory builds which had raised questions about U.S. demand amid a weak economic backdrop.

The crude oil market has been affected by fears over the economic impact of rising interest rates and a weakening demand outlook in China.

Oil prices remain sharply lower for the week so far following hawkish comments from Fed chief Jerome Powell which suggested interest rates could rise faster and further than expected. Brent crude is down 3.6% for the week.

for this day, before it reversed the crude oil price fell for three days as fears over the economic impact of rising interest rates offset a surprise drop in U.S. crude inventories and hopes for Chinese demand.

U.S. Federal Reserve Chair Jerome Powell’s comments this week on the likelihood that interest rates will need to be raised more than previously expected in response to recent strong data continued to weigh on oil and other risk assets because of the potential impact on economic and demand growth.

Recall that crude oil prices on Tuesday registered their largest daily fall since early January after Powel’s comments.

There was some support for oil from Wednesday’s official figures on U.S. crude inventories, which fell 1.7 million barrels last week to end a 10-week run of increases.

Oil has also drawn support from expectations of rising Chinese demand. While China’s crude oil imports in the first two months of 2023 fell 1.3% year on year, analysts pointed to accelerating imports in February as a sign that fuel demand was rebounding after Beijing scrapped COVID-19 controls. #Oil Prices Spike over Surprise Drawdown in US Stock