Oil Prices Stable in Asian Trade Amidst Uncertainty
Little Movement in Oil Prices Due to Inventory Build-Up and Ceasefire Talks
Oil prices remained steady in Asian trade on Wednesday, with traders hesitant to make significant moves amidst signs of a potential build in U.S. inventories and anticipation of key inflation data.
Market participants were also closely monitoring ceasefire talks between Israel and Hamas, although progress seemed to be slow in the latest negotiations.
The chatter surrounding a potential ceasefire in the Middle East had initially pushed oil prices down from five-month highs earlier in the week. However, limited progress in the talks, coupled with Iran’s threats against Israel, helped prevent significant losses in crude prices.
Crude oil futures set to expire in June held steady at $89.49 a barrel, while Brent crude rose 0.1% to $84.54 a barrel by 20:24 ET (00:24 GMT).
US Inventory Data Points to Larger-Than-Expected Build-Up
Data from the American Petroleum Institute (API) indicated a bigger-than-expected 3 million barrel increase in U.S. inventories for the week ending April 5. This suggested that supplies in the largest fuel consumer globally might not be as tight as previously assumed, despite record-high production levels.
However, a continued drawdown in gasoline inventories signaled robust fuel demand, providing some support to prices.
The API data typically foreshadows a similar report from the Energy Information Administration (EIA), scheduled for release later on Wednesday.
The EIA upgraded its forecast for U.S. oil production for this year, potentially easing supply concerns. Nevertheless, the agency also raised its price outlook for 2024 to $88.55 per barrel.
Focus on CPI Data and Rate Outlook Uncertainty
Market attention was also directed towards the release of U.S. consumer price index (CPI) data later in the day. The report was expected to show a slight uptick in inflation for March, influencing the Federal Reserve’s interest rate decisions and providing further direction for markets.
A recent surge in inflation, coupled with warnings from several Fed officials about the implications of persistent price increases, could lead to a prolonged period of higher interest rates. This scenario is likely to weigh on economic activity and dampen oil demand.
The CPI report follows a strong inflation print last week, with concerns about rising prices shaping the central bank’s stance on monetary policy.
