Crude oil prices fell in Asian trading this morning, Wednesday, March 22 (2023), to trim their gains for two consecutive days.
The decline came after an industrial report showed that US oil inventories rose unexpectedly last week, indicating the possibility of weak demand for fuel.
Crude oil prices were, amid expectations of a breakthrough in the banking crisis following UBS’ acquisition of Credit Suisse, after the major central banks said they would enhance market liquidity and support the banking system.
Crude oil prices today
By 07:18 a.m. GMT (10:18 a.m. Mecca Al-Mukarramah time), the prices of benchmark Brent crude futures – for May 2023 delivery – fell by 0.57%, to $ 74.89 a barrel.
The price of US West Texas crude futures – for May 2023 delivery – decreased by 0.67%, to $69.20 a barrel, according to data viewed by the specialized energy platform.
Crude oil prices ended their trading, yesterday, Tuesday, March 21, with an increase of about 2.5%, in an attempt to compensate for some losses after a week of banking turmoil, which cast a shadow on the markets.
US oil stocks
Data from the American Petroleum Institute showed on Tuesday that US crude inventories rose by about 3.3 million barrels in the week ending March 17.
This defied expectations of 8 analysts polled by Reuters for a decline of about 1.6 million barrels.
Traders and analysts will await data from the US Energy Information Administration on Wednesday; To see if they confirm signs of weak demand for Crude Oil.
US interest rates
Meanwhile, markets await the outcome of the US Federal Reserve’s meeting on Wednesday, in what is widely seen as the Fed’s most challenging decision in recent times.
After the meeting, Fed Chairman Jerome Powell is expected to reveal new economic forecasts and the central bank’s path to raising interest rates.
While the market expects the Federal Reserve to raise interest rates by 25 basis points on Wednesday, some senior central bank watchers say it may pause further rate hikes or delay issuance of new economic forecasts due to turmoil in the global banking sector.
A pause in interest rate hikes may help fuel economic activity, thus increasing fuel demand.
Oil market conditions
Crude oil prices recorded their biggest decline in months last week, after the failures of prominent US banks that began on March 10, and a crisis at Credit Suisse in Europe.
An emergency rescue by Credit Suisse over the weekend helped crude oil prices recover, according to data seen by the specialist energy platform.
OPEC+ officials, hedge fund managers, and oil market participants have described the recent drop in crude oil prices as speculative, and insist that increased demand will drive prices higher in the coming months.
ANZ analysts said that major traders see underlying oil issues as driving prices higher, noting that there are concerns that supply could be hit more than demand amid the banking crisis.
They added that US shale oil production is most at risk of tightening credit conditions from US regional banks.
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