Oil prices fell on Thursday after a larger-than-expected increase in U.S. crude inventories, raising concerns about slowing demand, while pressures mounted from signs that U.S. interest rates may remain high.
The Energy Information Administration said on Wednesday that U.S. crude oil inventories rose while gasoline inventories fell. Crude inventories increased for the fifth consecutive week, rising by 4.2 million barrels to 447.2 million barrels in the week ending February 23, compared to analysts’ expectations in a Reuters survey for an increase of 2.7 million barrels.
On another note, high borrowing costs lead to a reduction in economic growth and demand for oil. Traders have already lowered their expectations for U.S. interest rate cuts after a series of strong data, including readings on consumer prices and producer prices. They expect the easing cycle to begin in June, compared to the beginning of 2024.
Market participants are now awaiting the release of the U.S. Personal Consumption Expenditures Price Index, the Federal Reserve’s preferred gauge of inflation, for further signals. The index, expected to be released on Thursday, is anticipated to show a 0.3% month-on-month increase in prices in January.
The market is also looking for the potential extension of voluntary oil production cuts by OPEC+, which has limited price declines at the moment.
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Shady Fouad is a technical analyst at LDN Company
Shady's strategic vision in the currency markets is reinforced by more than fifteen years of trading experience, which enables him to blend economic and technical analyzes with high efficiency, and find the best investment ideas for traders.
