Oil Prices Rebound Ahead of EIA Inventories Data
After a week of consolidation, oil prices rebounded on Wednesday ahead of the release of inventory data from the US Energy Information Administration (EIA). Crude oil prices back earlier losses as markets focused on the tight supply outlook.
The international benchmark crude Brent traded at $92.89 per barrel, representing a 0.50% gain from the closing price of $92.43 a barrel in the previous trading session on Tuesday.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $91.16 per barrel, up 0.85% from Tuesday’s close of $90.39 per barrel. Recall that crude oil prices came under pressure on Tuesday over concerns that global central banks would keep interest rates at high levels for an extended period, leading to a decrease in global oil demand.
However, tighter fundamentals reversed the losses. Supply concerns triggered by output cuts in Saudi Arabia and Russia of around 1.3 million barrels per day (bpd) until the end of the year continue to boost prices.
Russia’s decision last week to limit the export of gasoline and diesel fuel to balance the domestic market exacerbated supply concerns.
Meanwhile, the American Petroleum Institute (API) announced its estimate of a rise of around 1.59 million barrels in US crude oil inventories relative to the market expectation of a 1.65 million barrel drop.
The US Energy Information Administration’s data on oil stocks will be announced later on Wednesday. The API release yesterday may have surprised some, recording an increase of 1.586 million barrels, a lot more than the 0.7 million decline that’s expected today.
“But it won’t alter the view that the market is extremely tight following a number of supply cuts from OPEC+ countries. I think what we’ve seen over the last week or so is a little profit-taking and the fact it’s already on the march higher is potentially a sign of how bullish traders still are”, said Craig Erlam, OANDA analyst in a note.