Oil Prices Rise on Tightening Supply Prospects Amid Inflation Concerns
Oil Prices Rise Amid Tightening Supply Expectations
In Asian trade on Wednesday, oil prices climbed as industry data revealed a decrease in U.S. inventories, enhancing prospects of tighter supplies. However, gains were tempered by anticipation of significant inflation data.
Positive Indicators and Influences
Federal Reserve Chair Jerome Powell's remarks emphasizing the resilience of the U.S. economy provided a boost to crude markets.
China's announcement of plans for a substantial bond issuance contributed to market optimism, supporting oil prices.
Devastating wildfires in Canada, particularly near Fort McMurray, a major oil sands city, heightened expectations of tighter North American markets.
Factors Limiting Gains
Stronger-than-expected U.S. producer price index data fueled concerns about forthcoming consumer price index inflation figures, dampening market sentiment.
Brent oil futures for July delivery rose 0.4% to $82.70 per barrel.
WTI crude futures climbed 0.4% to $77.97 per barrel.
US Inventory Data Impact
The American Petroleum Institute (API) reported a 3.1 million-barrel decline in U.S. oil inventories, surpassing expectations and suggesting a potential pickup in fuel demand, particularly during the summer travel season.
The API data typically aligns with official inventory data, which is anticipated later on Wednesday.
Market Outlook
Traders remained cautious ahead of key U.S. Consumer Price Index (CPI) data, following hotter-than-expected Producer Price Index (PPI) data for April.
Persistent inflationary pressures could compel the Federal Reserve to maintain high-interest rates for an extended period, potentially dampening global economic activity and oil demand.
