New York, June 28 (BNA): Oil prices rose on Wednesday after industry data showed a bigger-than-expected drop in US stockpiles, pointing to strong demand from the world’s largest oil consumer, but gains were capped by interest rate concerns. walking long distances.
Brent crude futures rose 34 cents, or 0.47%, to $72.60 a barrel at 0626 GMT, while US Brent crude futures rose 26 cents, or 0.38%, to $67.96 a barrel, Reuters reported.
Both contracts fell about 2.5% in the previous session amid signs that central banks may not be done raising interest rates.
“Tuesday’s slowdown has pushed Brent and WTI to support levels that have held through the price slumps of the past two months,” said Vandana Hari, founder of Vanda Insights, an oil market analysis provider. “The floor is being tested again – whether it holds or not.”
The six-month Brent crude spread – a price structure in which sooner-load contracts trade higher than late-load contracts – was at its lowest in six months.
But the two-month spread was in the opposite price position, which is called contango.
“The widening of the hold at the fast end and the weak pullback along the forward curves of Brent and WTI indicate the market’s increasing awareness of oversupply,” Harry said.
Crude inventories fell by about 2.4 million barrels in the week ending June 23, according to market sources, citing data from the American Petroleum Institute. Analysts had expected a withdrawal of 1.76 million barrels. US government data on inventories is due on Wednesday.
Gasoline stocks fell by about 2.9 million barrels, compared to estimates for a withdrawal of 126,000 barrels.
On the demand side, European Central Bank President Christine Lagarde said on Tuesday that stubbornly high inflation will require the bank to avoid announcing an end to rate hikes. Higher interest rates can affect economic activity and demand for oil.
The rise in US consumer confidence in June also led to market fears that the Federal Reserve may continue to raise interest rates.
Analysts said that markets are struggling to shake off concerns that higher interest rates will affect global growth and demand for oil.
“However, we still expect the market to tighten in the second half of 2023 on the back of Saudi supply cuts from July with upside risks to prices from current levels,” analysts at National Australia Bank Commodities Research said in a note.
Separately, Russia’s energy ministry said it saw no shortage of gasoline in the domestic market, as companies cut exports and increased production after gradually completing planned maintenance.
The Energy Department added that diesel production at the end of June was 2% higher than in the same period last year, and inventories are at a historic high.
In China, annual profits at industrial firms extended a double-digit decline in the first five months as slumping demand squeezed margins, boosting hopes for more policy support to boost the faltering post-COVID economic recovery.
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