HG Markets

Unexpected Rise in U.S. Oil Inventories Sparked Demand Concerns

Harvest Global Markets :

Concerns about demand were raised by an unexpected increase in U.S. oil inventories, which led to a drop in oil prices and a stalling of pressure on Wednesday for the three-day gain. In order to predict the next rate decision in the top oil-consuming country, investors are expecting U.S. inflation statistics.

Specifically, analysts had predicted a 900,000-barrel outflow but instead stocks increased by almost 3.618 million barrels. This surge is seen to be a precursor to declining demand. Investors are currently anticipating the most recent official data on oil inventories, which the Energy Information Administration (EIA) is scheduled to disclose at 1930 HRS today.

The global oil market is currently being influenced by a number of variables. The market has already been influenced by the supply cuts made by OPEC+ and Russia. Saudi Arabia has also promised to reduce production by 500,000 bpd starting in May. Investors are therefore keenly awaiting the publication of the impending OPEC report. This study is anticipated to offer significant information about whether OPEC and its partners will need to further reduce output in order to support oil prices. There has been a substantial impact as a result of the recent wildfires in Alberta, Canada’s top oil-producing province. Particularly, the country’s oil and gas industry has had to halt at least 319,000 barrels of oil equivalent per day of production, or 3.7% of total output. Furthermore, additional recent events have added to this supply interruption. These include China’s slower export growth in April, fewer crude imports, a surprise rise in US petroleum stocks, and reduced crude imports.

Investors should keep an eye out for any signs of the U.S. economy’s health because things right now seem bleak and unclear. The market is keenly awaiting the release of the consumer price index (CPI) data for the United States. This will be a key determinant of the Federal Reserve’s future course of action. Despite the U.S. central bank decreasing its forecast for future rate hikes, New York Fed President John Williams said on Tuesday that inflation is still too high and that the bank will not hesitate to raise rates once more if required. These trends imply that investors should exercise caution and keep a close eye on market indications in order to make wise choices.

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