Oil prices decline in early trade

17 Feb 2023 , 08:22 AM

Strong U.S. economic statistics increased worries that the Federal Reserve will maintain restrictive monetary policy to combat inflation, which might hurt fuel demand even as crude stockpiles build, which caused oil prices to decline on Friday and were on course for weekly losses.

Brent crude futures had lost 49 cents, or 0.6%, to reach $84.65 per barrel, while U.S. West Texas Intermediate (WTI) crude futures had also lost 0.6%, losing 46 cents to reach $78.03. Both benchmarks were expected to drop by around 2% on a weekly basis.

The U.S. producer price index increased 0.7% in January compared to a 0.2% decline in December, according to data. Unexpectedly, compared to the 200,000 estimate, jobless claims dropped to 194,000, according to a Reuters poll.

According to a larger-than-anticipated rise, the Energy Information Administration (EIA) stated that U.S. crude oil stockpiles last week increased to their highest level since June 2021.

During the past few weeks, the price of oil has see-sawed between concerns about an impending recession in the United States and inflation-fighting rate hikes and optimism for a recovery in demand in China, the world’s largest oil consumer.

After relaxing its COVID-19 restrictions, China will account for nearly half of this year’s increase in oil demand, according to the International Energy Agency (IEA). However, restrained production by OPEC+ countries, which are members of the Organization of the Petroleum Exporting Countries and allies, could result in a supply deficit in the second half of the year.

The present OPEC+ agreement to reduce oil production levels by 2 million barrels per day will be in place until the end of the year, according to Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman. He also expressed continued caution on Chinese demand.

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