Oil prices increased in the international commodities market on Wednesday, following a report highlighting a significant drop in U.S. crude stockpiles.
The outlook for demand in China continues to be negative, while the latest report from the World Bank suggests an oversupply of oil in 2025 and 2026. This is expected to maintain pressure on crude oil prices, with a more negative perspective from other industry stakeholders.
Brent crude has increased by 0.8% to $71.27 per barrel, and WTI is trading 0.9% higher at $67.83 per barrel.
The American Petroleum Institute announced late Tuesday that U.S. commercial crude oil stocks fell by 573,000 barrels, exceeding market predictions of a 2.3 million barrel increase.
The decline in crude oil reserves indicated market views of increasing domestic demand, which is contributing to rising prices.
The Energy Information Administration (EIA) is slated to release official data later today. If a decrease in crude oil inventories is validated, prices are expected to rise further.
This week, data on US growth and private sector employment is anticipated to shed light on the speed of interest rate reductions by the US Federal Reserve (Fed). While it is deemed highly likely that the Fed will cut the policy rate by 25 basis points in the upcoming month, the likelihood of an additional rate cut in December stands at 74%. An increase in economic activity is anticipated to boost oil demand in the nation. Furthermore, the ongoing military actions in Israel within the Middle East—home to a majority of the world’s oil resources—have contributed to rising prices.
Crude oil prices are currently lingering at one-month lows as concerns over supply disruptions in the Middle East diminish, and the market redirects its attention to a weaker demand forecast along with predictions of a surplus in supply for the next year.