Oil Rises as US Crude Inventories Drop
Crude oil prices edge upward after United States (US) data showed a larger-than-anticipated drop in crude inventories, indicating a rebound in the country’s demand outlook, while expectations of rate hikes by major central banks are limiting price increases.
International benchmark Brent crude traded at $75.47 per barrel, a 0.20% increase from the closing price of $75.32 a barrel in the previous trading session. Simultaneously, the American benchmark West Texas Intermediate (WTI) traded at $71.72 per barrel, up 0.08% from the previous session’s close of $71.66 per barrel.
Late Tuesday, the American Petroleum Institute (API) announced its estimate of a fall of 3.93 million barrels in US crude oil inventories relative to the market expectation of a 1 million-barrel drop.
The US Energy Information Administration’s data on oil stocks will be announced later on Wednesday. A fall in crude stocks in line with the API’s expectations would signal a rebound in crude demand in the US, the world’s largest oil consumer, and support upward price movements.
The fall in the US dollar index, which made crude oil less expensive for foreign buyers, supported the price escalation.
The US dollar index, which measures the value of the American dollar against a basket of currencies, including the Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, fell to 101.483 at 9.34 a.m. (0634 GMT), a 0.24% decline from Tuesday’s closing of 101.725.
Nonetheless, prices remain under pressure ahead of Wednesday’s possible interest rate hikes by the US Federal Reserve and the European Central Bank. Higher interest rates would lead to an economic slowdown, curtailing oil demand.
Elsewhere, the price of Russia’s flagship crude, Urals, posted a year-on-year decline of almost 40% between January and April this year, official figures showed.
Russian Urals crude oil traded at $51.05 per barrel in the January to April period of this year, down from $84.68 per barrel in the same period last year, recording an annual decline of 39.7%, according to a statement by the Finance Ministry.
April this year saw a small rebound to $58.63 per barrel, the ministry added. In December last year, EU member countries agreed on a $60 per barrel price cap for Russian crude oil exports transported by sea.
Many countries that continue to purchase Russian oil, particularly China and India, seek discounts from Russia while risking sanctions violations.
