Oil Prices Steady Amid Mixed Signals from U.S. Economic Data and Crude Inventory Reports
Market Overview
Oil prices remained broadly steady as mixed signals from U.S. economic data and crude inventory reports influenced the market. Pressure from U.S. data suggesting higher-for-longer interest rates was balanced by inventory numbers indicating robust demand for crude in the United States.
Current Prices
As of 0921 GMT, Brent futures dipped by 17 cents, or 0.2%, to $83.43 a barrel, while U.S. West Texas Intermediate (WTI) crude fell by 12 cents, or 0.15%, to $79.11. Both benchmarks are set for monthly losses, with Brent futures expected to decline by over 5% and WTI by over 3% compared to last month.
Market Sentiment
Yeap Jun Rong, a market strategist at IG, commented, "The broader risk-off environment has translated to some downward pressures on oil prices, which overrides the larger-than-expected drawdown in U.S. crude inventories from the recent API data."
Inventory Data
U.S. crude oil inventories fell by 6.49 million barrels last week, significantly exceeding analyst projections of a 1.9 million barrel draw, according to American Petroleum Institute figures released on Wednesday. The U.S. Energy Information Administration (EIA) is scheduled to release its data later on Thursday.
Global Inventory Trends
Despite the drawdown in U.S. crude stocks, global oil inventories increased throughout April due to soft fuel demand. This trend might reinforce the case for OPEC+ producers to maintain supply cuts when they meet on June 2. Delegates and analysts expect OPEC+ members, including the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, to keep current production cuts in place to support prices.
OPEC+ Meeting Outlook
"A greater driver for oil prices ahead may revolve around the upcoming OPEC+ meeting this weekend, which could see OPEC members extending their current production cuts potentially till the end of the third quarter to support prices," Yeap added.
Impact of U.S. Economic Data
Oil markets have been under pressure due to expectations that the Federal Reserve will maintain higher interest rates for an extended period. Brent crude settled at its lowest in more than three months on May 23. The Fed's survey indicated that U.S. economic activity continued to expand from early April through mid-May, but businesses grew more pessimistic about the future, with inflation increasing at a modest pace.
Higher borrowing costs tend to restrict funds and consumption, negatively impacting crude demand and prices. The Fed is now expected to begin cutting rates in September at the earliest, a shift from the earlier expectation of a June start.
Upcoming Data and Market Watch
Investors are also monitoring key inflation data, with the U.S. personal consumption expenditures index -- the Fed's preferred measure of inflation -- and euro zone consumer prices due on Friday.
