Oil rates decline due to concerns of sluggish US demand
Date
5/22/2024 5:50:14 AM
(MENAFN) Oil rates experienced a decline on Wednesday, driven by data released by the American petroleum Institute indicating a growth in inventory by 2.5 million barrels and concerns surrounding elevated US interest rates. At 10.18 a.m. local time (0718 GMT), the international benchmark brent crude saw a decrease of 1.36 percent, trading at USD81.75 per barrel compared to the previous session's closing price of USD82.88 per barrel. Similarly, the American benchmark West Texas Intermediate (WTI) witnessed a decline of 1.42 percent, trading at USD77.54 per barrel at the same time, down from the previous session's USD78.66 per barrel.
These price drops were fueled by apprehensions regarding oil demand in the United States, the largest consumer of oil globally. The American Petroleum Institute's data revealing a rise of approximately 2.5 million barrels in US commercial crude oil stocks last week contributed to concerns about weakening demand, consequently exerting downward pressure on prices. Investors are awaiting official inventory data from the US Energy Information Administration (EIA), scheduled for release later on Wednesday, which will provide further insights into market dynamics.
While there is optimism surrounding the possibility of the US Federal Reserve (Fed) implementing its first interest rate cut of the year, Fed officials are urging caution against hastily reducing rates. This cautionary stance is heightening concerns regarding demand in oil markets. Despite the lingering hope for a rate cut, officials stress the importance of avoiding rapid rate cuts, emphasizing the need for a balanced approach.
Various factors are contributing to the volatility in oil rates, including supply risks due to tension in the Middle East and a sluggish economic outlook in China, the largest importer of oil globally. These uncertainties are adding complexity to the oil market landscape, influencing investor sentiment and contributing to price fluctuations.
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