Oil prices decline in early trade

17 May 2023 , 08:30 AM

Following weaker-than-anticipated economic data from the United States and China, the two biggest oil consumers in the world, the price of oil fell for a second day on Wednesday. 

Brent crude futures decreased by 29 cents, or 0.4%, to $74.60 a barrel. As of GMT 00:05, U.S. West Texas Intermediate crude was down 32 cents, or 0.4%, at $70.55.

News reports quoting American Petroleum Institute data stated that during the week ending May 12, U.S. oil stocks increased by around 3.6 million barrels. Seven analysts surveyed by Reuters had predicted a drawdown of 900,000 barrels.

After data revealed that retail sales increased by 0.4% in April, below expectations for an increase of 0.8%, this raised concerns about U.S. growth.

The market is still being affected by discussions on lifting the US debt ceiling. If Congress does not raise the debt ceiling, the U.S. Treasury Department predicts that the country would experience a devastating default as early as June 1.

China’s industrial production and retail sales growth in April fell short of expectations, indicating that the economy slowed down at the start of the second quarter.

The Group of Seven (G7) leaders’ decisions to increase sanctions against Russia will be widely watched by the markets when they meet in Japan from May 19–21.

According to officials with direct knowledge of the conversations, the G7 is attempting to target third-country sanctions evasion in order to restrict Russia’s future energy production and stop trade that supports its armed forces.

Josep Borrell, the head of foreign policy for the European Union, stated separately to the Financial Times that the EU should take action against India for reselling Russian oil as refined petrol into Europe.

Even though the International Energy Agency increased its prediction for the world’s oil demand this year to a record 102 million barrels per day (bpd), oil prices continued to decline.

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