Oil prices remained stable on Wednesday, despite an unexpected increase in U.S. crude inventories, as economic worries clashed with a more constrained supply projection for the latter part of the year, according to Reuters.
In the futures market, Brent crude experienced a slight rise of 2 cents, or 0.7 percent, reaching $74.42 per barrel. Meanwhile, the West Texas Intermediate U.S. crude oil price fell by 5 cents, settling at $70.81 at 0921 GMT.
The International Energy Agency (IEA) reported on Tuesday that demand is anticipated to outpace supply by 2 million barrels per day (bpd) in the second half of the year, with China accounting for 60 percent of oil demand growth in 2023.
Edward Moya, an analyst at OANDA, remarked, “Crude prices remain under pressure as energy traders are unable to shake off global demand concerns. Regardless of the optimism surrounding China’s performance in the second half of the year, the current situation is rather disappointing.”
According to market sources referencing American Petroleum Institute figures, U.S. crude stockpiles rose by approximately 3.6 million barrels in the week ending May 12, deviating from expectations of a 900,000 barrel reduction, as projected by seven analysts polled by Reuters.
The U.S. government will release data on crude and product stockpiles at 1430 GMT.
Amidst worries about U.S. growth, the crude inventory buildup further compounded concerns. Recent data revealed that retail sales in April only increased by 0.4 percent, falling short of the estimated 0.8 percent rise.
Furthermore, ongoing negotiations to raise the U.S. debt ceiling continued to weigh on the market, with the U.S. Treasury Department warning of a potential default as early as June 1 if Congress fails to raise the ceiling.
In China, April’s industrial output and retail sales growth also fell below forecasts, indicating a slowdown in the economy during the early stages of the second quarter.
Vandana Hari, founder of oil market analysis provider Vanda Insights, stated, “Markets are adopting a wait-and-see approach regarding the outcome of crucial negotiations to raise the U.S. government’s debt ceiling.”
Additionally, macroeconomic data for April confirmed the narrative of a sluggish and uneven recovery in the country, which continues to impact sentiment in the oil market.