On Wednesday, oil prices remained stable as fears over weakening demand outweighed news from the industry that revealed a larger-than-anticipated reduction in U.S. crude stockpiles.
At the start of Wednesday’s trading day in London, Brent crude futures were trading at $100.35, while U.S. West Texas Intermediate saw a modest 0.1 percent increase to $95.07 per barrel. WTI had risen earlier in the day by around $1.
Oil prices should be supported by a steeper decrease in stockpiles, but the recovery was constrained by worries about possibly poor demand, and the White House announcement that it will further release strategic reserves.
Additionally, the possibility that the US Federal Reserve might make an aggressive rate increase announcement later on Wednesday dampened morale and constrained the advance in oil prices.
What you should know
- Following the settlement on Tuesday, the industry association, American Petroleum Institute reported that US oil stocks dropped by 4 million barrels over the previous week.
- That exceeded the drop that economists predicted in a Reuters poll by a factor of four. [EIA/S]
- Contrary to predictions for a gain of 3.5 million barrels, gasoline stockpiles decreased by 1.1 million barrels, according to the report.
- Later on Wednesday, the Energy Information Administration of the US government releases its weekly oil report.
- The Biden administration announced on Tuesday that it will sell an extra 20 million barrels of crude from the nation’s Strategic Petroleum Reserve as part of a previously announced plan to use the facility to lower oil prices, which have been boosted by Russia’s invasion of Ukraine and a rebound in demand after the COVID-19 pandemic.
- The government announced in late March that it will release an unprecedented 1 million barrels of oil from the SPR every day for six months. With roughly 70 million barrels supplied to buyers, the United States has now sold 125 million barrels from the reserve.
- As a result of concerns about the prognosis for U.S. demand and the possibility of a recession, the U.S. Federal Reserve is anticipated to increase interest rates by 75 basis points later on Wednesday.
