CRUDE STOCKS RISE AS NEGATIVE U.S. DATA CAUSE OIL PRICE DECLINE

CRUDE STOCKS RISE AS NEGATIVE U.S. DATA CAUSE OIL PRICE DECLINE

A surprising increase in U.S. crude stocks and fears of a recession that were fueled by dismal U.S. retail sales and output figures caused oil futures to drop by about $1 on Thursday, January 19, extending losses from the previous day.

Brent crude futures were down 84 cents, or 1%, to $84.14 per barrel after previously slipping to $83.76. A barrel of West Texas Intermediate (WTI) crude dropped by 91 cents, or 1.1%, to $78.57. Prior to this, it hit a low of $78.13.

“The worsening U.S. economic figures made the outlook for oil demand look bleaker as recession fears rise once more. Growth-sensitive commodities have fallen as a result of the risk-off attitude.” According to CMC Markets analyst Tina Teng, profit-taking may have also been a factor.

U.S. retail sales in December decreased more than they had in a year.

The manufacturing sector had its greatest decline in output in almost two years as a result of weaker consumer demand.

Even though inflation appears to have peaked and economic growth is declining, Federal Reserve members said interest rates needed to increase beyond 5%.

In a client note, analysts at ANZ Research stated that “this elevated the specter of a recession, with risk appetite falling as a result.”

Data from the American Petroleum Institute indicated that U.S. crude oil stockpiles increased by around 7.6 million barrels in the week ended January 13, which only served to deepen the gloom, according to market sources.

Nine analysts were surveyed by Reuters, and the average prediction was for a decline of approximately 600,000 barrels.

The significant rise was the second week in a row that inventory increased significantly.

However, experts had anticipated a 120,000-barrel increase in distillate inventories, which include diesel and heating oil, and instead saw a decrease of almost 1.8 million barrels.

Due to the United States’ Monday Martin Luther King Day holiday, the API report was postponed by a day. The weekly inventory report for the government’s Energy Information Administration will be made available on Thursday.

With aggressive rate hikes still on the table, the US dollar rose, impacting on oil demand by making the commodity more expensive for people holding foreign currencies.

 

Source: Energy Ghana

 

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