Oil steadies amid economic concerns, higher U.S. crude stocks

Singapore, July 12 (BNA): Oil prices barely moved on Wednesday as markets weighed on the prospect of an increase in US crude inventories and economic concerns versus planned supply cuts by the world’s top oil exporters and hopes for higher global demand.

Brent crude futures fell six cents to $79.34 a barrel by 0615 GMT, and US West Texas Intermediate crude fell six cents to $74.77 a barrel, Reuters reported.

“Essentially, we should hit a supply deficit situation in the third quarter, but whether this is punctuated by recession fears and dovish sentiment about rate hikes remains to be seen,” said Suvru Sarkar, chief energy analyst at DBS Bank.

Investors await US inflation data on Wednesday, looking for clues to the interest rate outlook in the world’s largest economy. Higher rates can slow economic growth and reduce demand for oil.

Currently, markets are seeing a 92% chance of a 25 basis point hike later this month, CME FedWatch tool showed.

In a sign of falling demand, market sources said, citing industry figures from the American Petroleum Institute, that US crude inventories rose by nearly three million barrels in the week ending July 7. Analysts polled by Reuters had expected a rise of 500,000 barrels in crude stocks.

If confirmed in data due from the Energy Information Administration (EIA) later Wednesday, that would be the first crude stockpile in four weeks and compares to an increase of 3.3 million barrels in the same week last year and a five-year average decline. 6.9 million barrels.

However, projections from the US Energy Information Administration and the International Energy Agency point to market tightening through 2024. The EIA’s projected global demand is expected to exceed supply by about 100,000 barrels per day in 2023 and by 200,000 barrels per day in 2024.

Separately, the International Energy Agency (IEA) said the oil market should remain tight in the second half of 2023, citing strong demand from China and developing countries along with recently announced supply cuts, by top exporters Saudi Arabia and Russia, among others. others.

Saudi Arabia, the largest producer, pledged last week to extend production cuts by one million barrels per day in August, while Russia will cut exports by 500,000 barrels per day.

“The short-term crude oil demand outlook shouldn’t be that bad, because everyone is taking a vacation that requires some travel this summer,” said Edward Moya, senior analyst at OANDA.

MI