US crude stocks drop, but fears of slowing growth and consumption weigh on the market
19 April 2023 - 07:41
byLaila Kearney and Muyu Xu
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New York/Singapore — Oil drifted lower on Wednesday as the market weighed potential interest rate hikes from the Federal Reserve that could slow growth and dampen oil consumption, offsetting falling US inventories and strong Chinese economic data.
Brent crude futures shed 7c to $84.70 a barrel at 3.20am GMT. West Texas Intermediate (WTI) crude was down 5c to $80.81 a barrel.
The US Federal Reserve likely has one more interest rate rise in store to fight inflation, Atlanta Fed President Raphael Bostic said on Tuesday.
Markets are pricing an 86% chance the Fed raises rates by 25 basis points (bps) at the May meeting.
Prices had got a lift from an industry report showing that US crude stocks fell by about 2.68-million barrels in the week ended April 14, according to market sources citing American Petroleum Institute (API) figures on Tuesday. Inventories of gasoline and distillate also fell last week, the sources said.
The official inventory report by the Energy Information Administration (EIA), the statistical arm of the US department of energy, is due at 2.30pm GMT on Wednesday.
Meanwhile, the economy of top crude importer China grew by a faster-than-expected 4.5% in the first quarter, while the country’s oil refinery throughput rose to record levels in March, data showed.
“The market has been impatient on the impact China’s reopening has had on demand. The fact that its economy is growing at its fastest pace in a year should [bode] well for demand in coming months,” said Brian Martin and Daniel Hynes, analysts from ANZ Research, in a note.
“However, this is being offset by weakness elsewhere,” they said, referring to the plunging refining margins for diesel and jet fuel that suggests global demand is softening.
Distillates and gasoline cracks from Asia to Europe are weak amid sluggish demand and increasing product supplies in the market.
Adding more pressure on the oil benchmarks is that Asian refiners continues to seize Russian crude in April. India and China have snapped up the vast majority of Russian oil so far in April at prices above the Western price cap of $60 a barrel, according to traders and Reuters calculations.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil prices fall on Fed rate hike concerns
US crude stocks drop, but fears of slowing growth and consumption weigh on the market
New York/Singapore — Oil drifted lower on Wednesday as the market weighed potential interest rate hikes from the Federal Reserve that could slow growth and dampen oil consumption, offsetting falling US inventories and strong Chinese economic data.
Brent crude futures shed 7c to $84.70 a barrel at 3.20am GMT. West Texas Intermediate (WTI) crude was down 5c to $80.81 a barrel.
The US Federal Reserve likely has one more interest rate rise in store to fight inflation, Atlanta Fed President Raphael Bostic said on Tuesday.
Markets are pricing an 86% chance the Fed raises rates by 25 basis points (bps) at the May meeting.
Prices had got a lift from an industry report showing that US crude stocks fell by about 2.68-million barrels in the week ended April 14, according to market sources citing American Petroleum Institute (API) figures on Tuesday. Inventories of gasoline and distillate also fell last week, the sources said.
The official inventory report by the Energy Information Administration (EIA), the statistical arm of the US department of energy, is due at 2.30pm GMT on Wednesday.
Meanwhile, the economy of top crude importer China grew by a faster-than-expected 4.5% in the first quarter, while the country’s oil refinery throughput rose to record levels in March, data showed.
“The market has been impatient on the impact China’s reopening has had on demand. The fact that its economy is growing at its fastest pace in a year should [bode] well for demand in coming months,” said Brian Martin and Daniel Hynes, analysts from ANZ Research, in a note.
“However, this is being offset by weakness elsewhere,” they said, referring to the plunging refining margins for diesel and jet fuel that suggests global demand is softening.
Distillates and gasoline cracks from Asia to Europe are weak amid sluggish demand and increasing product supplies in the market.
Adding more pressure on the oil benchmarks is that Asian refiners continues to seize Russian crude in April. India and China have snapped up the vast majority of Russian oil so far in April at prices above the Western price cap of $60 a barrel, according to traders and Reuters calculations.
Reuters
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