Harvest Global Markets :

The global crude appetite is seen swinging, as OPEC and its allies announced, earlier this month, to cut supply amid recessionary fears worldwide. The increased restrictions on Russian exports to Europe have made dollar-denominated oil pricier for other currencies in the previous weeks.

In recent weeks, the threat of supply cutbacks has been outweighed by the potential global economic downturn and tighter monetary policy by the major central banks. Uncertain economic activity in the United States and China, the world’s two biggest oil consumers, indicate a lowered demand for oil. The industrial slowdown in the Chinese economy plays a major role in crude oil demands as the Zero-Covid policy still prevails in China’s major provinces and industrial hubs.

On fears that escalating inflation and interest rates could significantly weaken global demand, oil prices have dropped substantially from yearly highs. In order to lower petroleum prices, the United States has also promised to release additional oil from its Strategic Petroleum Reserve.

Crude oil is slightly weaker today after inventory data showed that stockpiles rose by 4.5 million barrels last week, well ahead of the 200k anticipated from the American Petroleum Institute (API) report. This will place significant focus on the government’s Energy Information Administration (EIA) official U.S. stockpile report that is due later today. Rising inventories fuel worries that there could be a worldwide recession that might further reduce demand, which is already poor according to weaker Chinese crude import figures.

Traders are also looking to Thursday’s storage report as the next major catalyst while overall waiting for LNG export plants to exit maintenance outages in the coming weeks.