Oil Prices Slip as US Crude and Gasoline Stocks Surge
Oil prices drop as US crude and gasoline inventories rise unexpectedly, impacting market sentiment and future predictions.
The price of oil dipped below $79 per barrel after reports from the US government revealed a surge in both crude oil and gasoline inventories. Initially climbing by nearly 1.8%, West Texas Intermediate (WTI) crude saw a more modest increase of less than 1% following the announcement. Crude oil stockpiles in the US surpassed analysts' expectations, reaching their highest levels since April. Concurrently, there was also an uptick in gasoline reserves.
Despite the uptick in inventories, oil prices managed to hold steady due to a slower-than-anticipated rise in inflation across the US. This tempered inflationary pressure contributed to a more optimistic market sentiment, lending support to oil prices. Later today, the Federal Reserve is slated to release its interest rate decision, with potential revisions based on the latest Consumer Price Index (CPI) data.
Oil prices have been staging a recovery since last week's market downturn post the OPEC+ meeting. This rebound suggests a partial reversal of the considerable decline in speculative bullish bets recorded previously. Goldman Sachs recently noted ample room for the financial demand for oil contracts to expand further.
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Oil traders have been contending with volatile price movements as of late. The market's demand for physical barrels has been lackluster, juxtaposed with expectations for heightened consumption over the summer months. On Tuesday, the US forecasted an increase in its oil production for 2024, surpassing previous estimates and setting a new record. Meanwhile, the International Energy Agency issued a warning about a potential prolonged oil surplus persisting throughout the remainder of the decade.
Fawad Razaqzada, a market analyst at City Index and Forex.com, commented on the recent market dynamics, stating, "This week's noteworthy recovery has somewhat weakened the bearish grip on the market. However, further price movements are necessary to confirm a bottom." He added, "It remains a possibility that crude oil prices could face renewed pressure following the recent rebound. The current pattern of lower highs suggests that the short-term trend remains downward until chart signals indicate otherwise."
Also Read: Oil Prices Bounce Back Ahead of Key Industry Reports and Fed Decision
