Oil prices rise as market balances inventory data with global demand outlook
Date
5/16/2024 3:46:34 AM
(MENAFN) On Wednesday, oil prices experienced a notable rise of about 1 percent, rebounding from a two-month low touched in the previous session. This price movement reflects the market's balancing act between contrasting economic indicators, including data on the slowdown in inflation and US crude inventory levels, against the International energy Agency’s (IEA) projections of tepid global demand growth for oil.
Specifically, brent crude futures saw an increase of 37 cents, or 0.5 percent, settling at USD82.75 per barrel, while US West Texas Intermediate (WTI) crude rose by 61 cents, or 0.8 percent, closing at USD78.63 per barrel. Earlier in the session, both benchmarks were driven into technically oversold territory by the IEA's report, causing prices to plummet to their lowest points since February.
However, the trend reversed after US data revealed a more substantial-than-anticipated decline in crude oil inventories, coupled with inflation data that bolstered expectations of a potential interest rate cut by the US Federal Reserve in September. The Energy Information Administration reported that US crude inventories had dropped by 2.5 million barrels last week, significantly exceeding the 500 thousand barrel decline predicted by a Reuters poll.
Bob Yawger, director of energy futures at Mizuho, attributed this drawdown primarily to increased refinery run rates, noting that refiners are becoming more serious about their operations. This unexpected inventory reduction and the implications of the inflation data provided sufficient impetus to counter the earlier bearish sentiment driven by the IEA's report, resulting in the observed price rebound.
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