Oil increases as US crude and gasoline stock declines exceed expectations

28 Jun 2023 , 12:21 PM

After data revealed a larger-than-anticipated draw in its crude and gasoline stocks, markets became concerned about a supply shortage in the United States, the world’s largest oil consumer. This led to a slight increase in oil prices on Wednesday.

The price of Brent crude futures increased by 32 cents, or 0.4%, to $72.58 per barrel, while the price of WTI futures in the US increased by 23 cents, or 0.3%, to $67.94 per barrel.

On indications that central banks might not be finished raising interest rates, both contracts had dropped by around 2.5% in the previous session.

In the week ending June 23, crude stocks decreased by around 2.4 million barrels, according to market sources who cited information from the American Petroleum Institute, an industry trade body. An extraction of 1.76 million barrels was predicted by analysts.

Compared to expectations for a depletion of 126,000 barrels, gasoline stockpiles actually decreased by roughly 2.9 million barrels.

This comes as markets anticipate Saudi Arabia’s promised reduction in oil output beginning in July and after a conflict between Moscow and the Russian mercenary company Wagner sparked worries about potential interruptions in the oil supply.

On the demand side, Christine Lagarde, president of the European Central Bank, stated on Tuesday that the bank must refrain from proclaiming an end to rate increases due to persistently high inflation. Economic activity and oil demand may suffer from higher interest rates.

Markets were concerned that the Federal Reserve would likely need to keep raising interest rates as a result of a boost in consumer confidence in the United States in June.

In order to assess the health of the second-largest economy in the world, markets also anticipated statistics on China’s industrial profits that were expected on Wednesday.

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