Crude oil price continues to rise in the Thursday morning market within a horizontal channel. Currently, WTI futures which are the benchmark for US oil, are trading at $103.36, 0.93% higher, while Brent futures are trading at $108.7, 0.76% rise. The $106.21 and $109.31 range has been significant for Brent oil for the last three trading sessions. However, it dropped shortly past the channel’s lower border on Tuesday.
Currently, demand and supply challenges continue to affect crude oil prices, and so does increased inflation which will likely lead to slow economic growth worldwide.
IMF joined IEA and OPEC in reducing their expectations for global growth. Last week, OPEC changed its attitude toward global oil usage downwards to 100.5 million bpd. This change indicates a 410,000 barrels decline from its forecast before the Ukraine crisis. IEA also reduced its forecast last year by 260,000 bpd.
On Tuesday, IMF lowered its expectations by close to a percentage point. It sends warnings that the current Ukraine crisis will accelerate inflation challenges.
Moreover, with lower expectations of global economic growth, investors also focus on the current COVID-19 wave in China, a major international oil market. Hence, the current lockdowns in Shangai, China’s commercial hub, have put pressure on crude oil prices with increased demand concerns.
Nonetheless, factories are reopening; thus, there is hope for the better soon. Moreover, two districts outside the regions on quarantine have no new infections reports on Wednesday.
A weekly stockpiles report by US Energy Information Administration (EIA) indicated a drop in crude oil inventories by 8.020 million barrels by 15th April. The recorded draw is the largest since September 2020, leading to a crude oil price bounceback. Analysts had predicted a build of 2.471 million, which is lower than last week’s 9.382 million barrels. Distillate stocks also fell by 2.664 million barrels, while gasoline inventories dropped by 761,000 barrels.
Moreover, OPEC+ did not meet its March output target by producing 1.45 million bpd. This is after Russia’s output started falling after the West cut the Nation out through sanctions. Besides, Libya’s vital export terminals and oilfields have blockades that accelerate supply concerns and increase crude oil prices.