Oil prices were trading lower on Tuesday as investors were cautious after a rise in US. Crude inventories build up, furthermore the world’s biggest importer oil i.e. China latest economic data has shown that its economy is recovering at a slower pace than what had been predicted. What market participants are concerned about is a slowdown in economic growth in the world’s biggest economies. The latest GDP data from USA showed that the economy grew at 1.10% in the last quarter compared to 2.6% which was forecasted, also the UK economy‘s GDP remained the same in the last quarter as well and the European economy sentiments also point towards a slowdown in growth.
However what the market players are ignoring is the supply crunch in Oil which is anticipated in the coming months. IEA (International Energy Agency) in its latest monthly report has also pointed out that oil prices downturn is ignoring the looming supply deficit, moreover China demand for Oil is expected to surpass the market expectations and will account for 60% of the global oil demand in 2023. Also the US has announced that they will start filling their Strategic Petroleum Reserves (SPR) in the coming month, which further favors the oil bulls. On the supply side the OPEC+ is due to meet on 4th June 2023 in the meeting it is also expected supply cuts from OPEC+, the last time they met WTI crude price shot towards $82 per barrel after announcing supply cuts. In other news IEA also reported that despite the sanctions from the west on Russian Oil exports, Russia has reached the Post invasion high of 8.3 Million Barrels per day in April, in the recent G7 meetings further talks were held on imposing economic sanctions on Russia, this will add further volatility in the crude prices. The current US debt ceiling crises seems likely to be over after the Republican spokesperson talked to the press that the deal would most likely be brokered by the end of week. The strength in the Dollar Index due to upbeat Retail sales data is also one of the reason why crude prices are trading at a lower range. Investors will be watching closely the upcoming U.S crude inventories data today at 7:30 PM.