Last Updated: May 31, 2023, 23:40 IST
New York, United States of America (USA)
U.S. crude oil and gasoline stockpiles were seen falling last week, while distillate inventories likely increased, a preliminary Reuters poll showed on Tuesday. (Image: Reuters File)
Brent crude futures for August delivery were down 37 cents, or 0.5%, to $73.34 a barrel at 12:07 p.m. EDT (1707 GMT)
Oil prices fell on Wednesday on a stronger U.S. dollar and as weak data from top oil importer China raised demand fears.
Brent crude futures for August delivery were down 37 cents, or 0.5%, to $73.34 a barrel at 12:07 p.m. EDT (1707 GMT). U.S. West Texas Intermediate crude (WTI) fell 54 cents, or 0.8%, to $68.92.
Both benchmarks fell by over $2 earlier in the session to a multi-week low and by more than 4% on Tuesday.
Oil prices tumbled after China’s manufacturing activity contracted faster than expected in May on weakening demand, with the official manufacturing purchasing managers’ index (PMI) down to 48.8 from 49.2 in April. The outcome lagged a forecast of 49.4.
Further pressure came as the U.S. dollar rose, making commodities more expensive for buyers holding other currencies and weighing on oil demand.
The dollar index, which measures the U.S. unit against six major peers, saw support from cooling European inflation and progress on a bipartisan U.S. debt ceiling bill, which will advance to the House of Representatives for debate on Wednesday.
House passage would send the bill to the Senate, where debate could stretch to the weekend, as a June 5 deadline loomed.
Data also showed U.S. job openings unexpectedly rose in April, pointing to persistent strength in the labor market that could push the Federal Reserve to raise interest rates again in June.
“We have weaker-than-expected Chinese data, the debt limit situation, two years of flat spending, and likely another rate hike next month weighing on markets,” said Bob Yawger, director of energy futures at Mizuho.
Market players are also preparing for the upcoming June 4 meeting of OPEC+ – the Organization of the Petroleum Exporting Countries and allies including Russia.
Mixed signals by major OPEC+ producers on whether the group will decide to further cut oil production have sparked recent volatility in oil prices.
Despite the latest pullback in prices, banks HSBC and Goldman Sachs and analysts do not expect OPEC+ to announce further cuts in the upcoming meeting.
HSBC said on Wednesday that stronger oil demand from China and the West from the summer onwards will bring about a supply deficit in the second half of the year.
“The most likely action is inaction,” said PVM oil market analyst Stephen Brennock, regarding the OPEC+ decision.
In the U.S., field production of crude oil rose in March to 12.696 million barrels per day, the highest since March 2020, when the coronavirus pandemic began to decimate global energy demand, Energy Information Administration data showed on Wednesday.
U.S. crude oil and gasoline stockpiles were seen falling last week, while distillate inventories likely increased, a preliminary Reuters poll showed on Tuesday.
The poll was conducted ahead of reports from the American Petroleum Institute, an industry group, due at 4:30 p.m. EDT (2030 GMT) on Wednesday.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – Reuters) RohitRohit is a News18.com journalist with a passion for world affairs and a love for football. Follow him on Twitter at @heis_rohit…Read More