Oil prices increase after U.S. crude, fuel inventories decline and the dollar falls,

Oil prices increased on Wednesday for a second day, recovering from previous losses as the U.S. currency dropped off recent gains, U.S. gasoline inventory reports revealed larger-than-expected drawdowns, and consumer demand picked up again.

Brent crude futures ended the day at $89.32 a barrel, up $3.05 or 3.5%. The final price of U.S. West Texas Intermediate (WTI) oil futures was $3.65, or 4.7%, higher at $82.15 per barrel.

Oil prices, which fell by more than 22% during the third quarter, may be bottoming out, according to analysts, as Chinese demand appears to be picking up and U.S. sales of strategic reserves come to an end.

CIBC Private Wealth US senior energy trader Rebecca Babin stated, “I do think we are bottoming, but it is going to continue to be highly volatile and keep easy speculative money away from this market.”

Although refining product supply during the past four weeks was still 3% lower than it was during the same time last year, U.S. inventory data revealed that consumer demand had recovered.

U.S. crude stocks decreased by 215,000 barrels in the most recent week, while gasoline and distillate inventories also fell by 2.4 million and 2.9 million barrels, respectively, as refining operations decreased as a result of several outages.

Refining activity decreased, but refiners are still operating in the United States at 90.6% of their total capacity, the highest level for this time of year since 2014. This is due to both domestic and export demand.

1

On Wednesday, the dollar reached a new two-decade high versus a basket of currencies before reversing course.

Because buyers using other currencies must pay more for oil, a strong dollar lowers the demand for it. The dollar index was down 0.9% in early afternoon U.S. time.

Due to forecasts of weaker demand and a stronger U.S. dollar, Goldman Sachs reduced its forecast for oil prices in 2023 on Tuesday. However, the company said that global supply shortfalls only strengthened its long-term bullish outlook.

After the Bank of England announced it will intervene in the bond market to stop a damaging rise in borrowing costs on Wednesday, investors’ fears of a financial system-wide contagion were allayed. Global equities recovered from two-year lows.

Leave a Comment