Oil Prices Fall in Asian Trade Amid U.S. Inventory Build
Surprise Build in U.S. Inventories Challenges Tighter Market Notion
Oil prices took a hit in Asian trade on Wednesday following industry data that revealed an unexpected increase in U.S. inventories, casting doubts on the belief of tighter markets in the near future.
Resilient Dollar and Market Pressure
Additionally, the pressure from a strong dollar, coupled with anticipation regarding U.S. inflation and interest rate updates, pushed crude prices down from the four-month highs they had reached earlier in March.
Oil Price Movements
Crude oil futures for May delivery dropped by 0.8% to $85.55 a barrel, while Brent crude for May delivery fell by 0.7% to $81.05 a barrel by 21:39 ET (01:39 GMT). These fluctuating prices were observed amidst lower trading volumes preceding the upcoming Good Friday holiday.
Surge in U.S. Oil Inventories
The latest data from the American Petroleum Institute (API) highlighted a significant surge in U.S. oil inventories, with a build of 9.3 million barrels in the week ending March 22. This unexpected increase, in contrast to the previous week’s draw of 1.5 million barrels, raised concerns about the actual tightness in the U.S. crude markets.
Market Expectations and Global Factors
While expectations of reduced global oil supplies due to various factors fueled oil prices to four-month highs, the recent inventory data prompted some profit-taking as it questioned the narrative of tight markets. Despite this, global fuel markets are projected to remain tight, especially with Russia reducing gasoline production in response to Ukrainian attacks on its refineries.
Dollar Impact and Market Speculations
The strength of the dollar played a role in driving down oil prices, with traders shifting focus to the currency ahead of upcoming updates on U.S. inflation and interest rates. Market participants are eagerly awaiting the release of the Personal Consumption Expenditures (PCE) data, along with speeches from key Federal Reserve officials, to gauge the future trajectory of interest rates.
