Oil Prices decline in early trade

30 May 2024 , 08:29 AM

Thursday saw a decline in oil prices as investors awaited the release of the most recent data on US crude oil stockpiles, and strong economic growth in the country suggested that borrowing costs would continue to remain high, potentially hurting demand.

U.S. West Texas Intermediate (WIT) crude fell 3 cents, or 0.04%, to $79.19, while Brent futures shed 9 cents, or 0.1%, to trade at $83.52 a barrel.

According to market reports citing American Petroleum Institute data on Wednesday, distillates increased last week while crude oil and petrol inventories in the United States decreased.

According to reports, the API data revealed that during the week ending May 24, crude stocks decreased by 6.49 million barrels, while petrol inventories decreased by 452,000 barrels and distillates increased by 2.045 million barrels.

Later on Thursday, the U.S. Energy Information Administration (EIA) is expected to release the date.

The Organisation of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, may have more leverage to maintain supply cuts when they meet on June 2 if global oil inventories continue to rise through April as a result of soft fuel demand, according to OPEC+ delegates and analysts.

The anticipation that the Federal Reserve will maintain higher interest rates for an extended period of time has put pressure on the oil markets recently.

From early April to mid-May, the US economy strengthened, but businesses were more pessimistic about the future and inflation rose at a moderate rate, according to a Fed survey.

Increased borrowing costs typically restrict spending and capital, which is bad for the demand and price of crude oil. Rather than the June start to easing cycle that the markets had anticipated at the beginning of the year, the Fed is now projected to drop rates in September at the latest.

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