Oil Prices Decline Amid Mixed Data and Market Factors
Oil Prices React to US Inventory Data
Oil prices experienced a dip as investors processed a range of data related to US inventories. While crude stockpiles continued to build, gasoline stockpiles unexpectedly decreased, alongside a rise in refinery activity.
By 14:30 ET (19:30 GMT), futures for crude oil and gasoline contracts saw a 0.4% and 0.8% drop, respectively.
US Inventory Trends
The US saw a 4.2 million barrel decline in crude inventories, surpassing expectations. However, gasoline inventories increased by 2.8 million barrels, contrary to predictions. Distillate stockpiles also rose by 510,000 barrels.
Despite a slight increase in refinery activity to 81.5%, the rate remains significantly lower than earlier in the year.
US Economic Growth and Market Speculation
Concerns over US economic growth and inflation rates affected oil prices. Data revealed a decline in annualized US GDP growth from 4.9% to 3.2% in the fourth quarter. This led to speculation about potential rate cuts in 2024.
New York Fed President John Williams hinted at the possibility of three rate cuts this year to combat inflation.
OPEC+ Cuts and Market Outlook
Reports indicated that OPEC+ could extend supply cuts into the second quarter, buoying oil prices. Strong US refinery demand and increasing oil exports are contributing to tighter physical markets in the coming months.
Chinese spot buyers and potential OPEC+ supply cuts are expected to further tighten markets, supporting oil prices.
Political Developments Impacting Oil Prices
US President Joe Biden hinted at a ceasefire agreement between Israel and Gaza during the Muslim holy month of Ramadan. However, conflicting statements from Israeli and Hamas officials suggest ongoing tensions.
Geopolitical conflicts, including the Israel-Hamas war and Yemeni Houthi attacks, have contributed to the volatility in global oil prices.
Ambar Warrick contributed to this article.
