Brent Settles at $78.5 as US Crude Inventories Fall
Brent price has settled at $78.5 per barrel in the global commodities market on Wednesday after the American Petroleum Institute (API) report showed that US crude oil inventories declined by 3.4 million barrels last week..
There is supply risk in the oil market due to geopolitical tension in the Middle East, where major crude oil producers reside. Also, OPEC+ has continued to tighten output while some of the exporting countries have been unable to meet daily quotas.
China’s economy signals weak demand outlook while stronger US dollar raised energy costs in the US, the world largest oil consumers.
US inventories reduced after a 0.347 million barrel rise a week earlier, data from API’s Weekly Statistical Bulletin showed. According to analysts, this was the seventh draw in the past nine weeks but fell short of the 3 million barrel decline expected by the market.
Hence, Brent crude oil futures fell below $78.5 per barrel, extending a 2.4% decline in the previous session primarily due to concerns about weaker global demand and economic uncertainty.
WTI crude oil futures fell below $75 per barrel on Tuesday, extending a 2.4% decline in the previous session primarily due to concerns about weaker global demand and economic uncertainty.
Major Banks have lowered their price forecasts due to slowdowns in key markets like China, where economic malaise and the shift to electric vehicles are reducing fuel consumption.
Additionally, in Europe, diesel demand is expected to drop below pre-pandemic levels because of weak manufacturing and changes in the car fleet.
These bearish signals are countering previous gains driven by geopolitical risks and supply threats, contributing to the overall downward pressure on prices.
Despite these concerns, the American Petroleum Institute suggested a potential decline in nationwide crude inventories by 3.4 million barrels last week, which would mark the eighth drop in nine weeks if confirmed by official data.
API data showed a decline of 3.4 million barrels for the week ending August 23rd, surpassing market expectations of a 3.0 million barrel decrease. Moreover, ongoing supply-side concerns continued to support oil prices.
Libya’s eastern government recently imposed force majeure on all oil fields amid political conflict, raising fears of a potential shutdown. This, coupled with heightened geopolitical tensions in the Middle East, has increased concerns over tightening global supply.
However, oil gains were capped by Goldman’s downward revision of its Brent price forecast by $5 to a range of $70-$85 per barrel, with an expected average of $77 in 2025, down from $82. Additionally, lingering demand concerns from major markets also weighed on prices. #Brent Settles at $78.5 as US Crude Inventories Fall
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