Crude oil falls in early trade

22 Mar 2023 , 08:57 AM

After two straight days of increases, oil prices dipped in early Asian trade on Wednesday after a report from the industry revealed that U.S. crude inventories unexpectedly increased last week, a hint that fuel demand may be waning.

Brent futures, which had increased by more than 3% this week, were down 48 cents, or 0.6%, at $74.84 per barrel. The price of West Texas Intermediate (WTI) oil futures in the United States fell by 47 cents, or 0.7%, to $69.20.

The week ended March 17 saw an increase in U.S. crude stockpiles of roughly 3.3 million barrels, according to data released by the American Petroleum Institute on Tuesday.

That fell short of the 1.6-million-barrel drawdown that eight analysts surveyed by Reuters had predicted.

On Wednesday, traders and experts will be watching for data from the U.S. Energy Information Administration to see if it supports early indications of a decline in oil demand.

Markets are also anticipating the outcome of the US Federal Reserve’s meeting on Wednesday, which is largely regarded as the most difficult Fed policy decision in recent memory.

Following the meeting, Chair Jerome Powell is anticipated to present updated economic forecasts and the path the central bank will take in raising interest rates.

While the market expects the Fed to increase rates by 25 basis points on Wednesday, some of the most prominent central bank observers believe the Fed may decide to hold off on further rate hikes or postpone the release of new economic projections as a result of turmoil in the world’s banking industry.

A halt to rate increases would encourage economic growth, which would increase gasoline demand.

As high-profile U.S. bank failures began on March 10 and a crisis at Europe’s Credit Suisse culminated in an emergency rescue over the weekend, oil prices registered their steepest drops in months last week.

Officials from OPEC+, hedge fund managers, and other players in the oil industry have referred to the recent drop in oil prices as speculative and asserted that rising demand will drive prices higher in the months to come.

For feedback and suggestions, write to us at [e-mail]