Oil down on unexpected spike in inventories
Oil edges on Wednesday morning after data from the American Petroleum Institute (API) last week showed that inventories rose unexpectedly which could be a sign of waning demand, writes Reuters.
A barrel of European reference crude Brent goes for USD 74.99 on Wednesday morning, down from USD 75.12 the night before and USD 74.90 on Tuesday afternoon. Simultaneously, US West Texas Intermediate trades for USD 69.35, down from USD 69.43.
Data from the American Petroleum Institute on Tuesday showed US crude inventories rose by about 3.3 million barrels in the week that ended on March 17, which defies expectations of an inventory slump of 1.6 million barrels, according to Reuters.
Official inventory numbers are published on Wednesday afternoon by the US Energy Information Administration.
The market awaits the result of Wednesday’s meeting in the US Federal Reserve and expects the Fed to raise rates by 25 basis points.
A pause in rate hikes would help stoke economic activity and increase oil demand, analysts estimates, according to Reuters.
Officials of the Organization of the Petroleum Exporting Countries, Opec+, hedge fund managers and oil market participants have called the recent decline in oil prices speculative and insist that a spike in demand would raise prices accordingly in the coming months.
Other traders, however, eye fundamental issues driving oil prices higher.
”There are concerns that supply may also get hit more than demand amid the banking crisis. US shale output is most at risk from tighter credit conditions from regional US banks,” ANZ analysts note to Reuters.
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