Crude oil prices remain stable in early trade

12 Apr 2023 , 09:21 AM

Early trading on Wednesday showed little movement in oil prices as industry data revealed an unexpected increase in U.S. crude and petrol inventories, allaying concerns about a supply shortage prior to OPEC producers cutting their output.

U.S. oil futures have shifted into backwardation, indicating a tightening market, with the front-month contract trading 6 cents higher than the second month.

U.S. West Texas Intermediate dropped 6 cents to $81.48 per barrel, while Brent crude dropped 5 cents to $85.57 per barrel.

According to news reports, data from the American Petroleum Institute (API) showed that oil inventories increased by around 380,000 barrels in the week that ended on April 7 compared to expectations of a fall of 600,000 barrels from eight analysts surveyed by Reuters.

According to the API report, petrol stockpiles increased by 450,000 barrels at the same period whereas analysts had anticipated a 1.6 million-barrel decrease.

On Wednesday at 10:30 a.m. (1430 GMT), the US government will publish its stockpile numbers.

Prices had increased by roughly 2% on Tuesday due to expectations that the Federal Reserve could loosen its monetary policy after the release of Wednesday’s consumer price data in the United States.

Inflation, which is currently running at 5% by the Federal Reserve’s preferred measure, will reach ‘the mid-threes’ by the end of this year, according to Minneapolis Federal Reserve Bank President Neel Kashkari and Philadelphia Federal Reserve Bank President Patrick Harker, respectively.

The International Monetary Fund issued a warning on Tuesday that potential crises in the financial system might harm this year’s global economic expansion, but it also urged member nations to continue tightening monetary policy to combat persistently high inflation.

Oil demand and supply predictions will be updated in the monthly reports from the Organization of the Petroleum Exporting Countries (OPEC) and International Energy Agency, which are due on Thursday and Friday, respectively.

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