The global price of a barrel of oil decreased by more than 1.5% at the end of trading today, Wednesday, June 14 (2023), after the rise in US inventories, and the Federal Reserve’s decision to keep interest rates unchanged, for the first time since March 2022.
The International Energy Agency raised expectations for oil demand growth to 2.4 million barrels per day in 2023, but expected it to slow to 860,000 barrels per day next year.
Oil prices rose in early trading, amid fears of a supply shortage, after Saudi Arabia pledged to provide additional production cuts by one million barrels per day in July.
The global price of a barrel of oil today
At the end of the session, the price of benchmark Brent crude futures – for August 2023 delivery – fell by about 1.5%, to record $73.20 a barrel.
US West Texas Intermediate crude futures – delivery in July 2023 – also fell by 1.7%, to record $68.27 a barrel, according to figures seen by the specialized energy platform.
And the global price of a barrel of oil ended its trading yesterday, Tuesday, June 13, with an increase of more than 3%, to compensate for most of the losses it lost in Monday’s trading, in the hope of increasing demand for fuel after the Chinese central bank reduced the short-term lending rate.
Oil price analysis
Kelvin Wong, senior market analyst at OANDA, said: “Speculators seem reluctant to push prices higher due to imminent key data and events such as China’s industrial production, retail sales, and May home price index due tomorrow (Thursday), as well as US interest rates. To be announced on Wednesday.
And the US Federal Reserve decided to fix interest rates at 5% and 5.25%, after increasing them 10 times since March 2022.
And raising interest rates leads to strengthening the dollar, which makes commodities denominated in the US currency more expensive for holders of other currencies, and affects the price of a barrel of oil globally, and halting the increases would stimulate economic growth and demand for oil, and support prices.
Economists expect the Bank of Canada to raise interest rates again in July to 5%, after a surprising 25bp increase last week.
The European Central Bank is also expected to raise interest rates by another quarter of a percentage point tomorrow, Thursday, to calm stubborn inflation, but the Bank of Japan, which will announce its plan on Friday, is expected to maintain its ultra-loose policy.
US oil stocks
On the supply side, US oil inventories rose by 7.9 million barrels in the week ending June 9, contrary to the average estimate for a decline of 500,000 barrels from analysts polled by Reuters.
Inventories of gasoline and distillates in the United States rose by about 2.1 million barrels each during the past week.
Meanwhile, OPEC+ has given Russia a slightly higher baseline for oil production, which means Russia can produce more under the latest quotas than previously agreed.
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