Oil prices are now a result of the US economy’s strong demand outlook and the Federal Reserve’s September 2024 rate reduction. The closing price of the previous trading session, which was $85.08 per barrel, was increased by 0.47% to $85.48 per barrel for international benchmark Brent crude.
At the same time, the U.S. benchmark West Texas Intermediate (WTI) was trading at $81.91, up 0.58% from the previous session’s closing price of $81.44 a barrel.
The Energy Information Administration (EIA) issued statistics late Wednesday that showed a 1.1% decline in US commercial crude oil stocks during the week ending July 12.
Compared to the market’s estimate of a drop of nearly 900,000 barrels, inventories fell by approximately 4.9 million barrels to 440.2 million barrels. However, strategic petroleum reserves, which are excluded from commercial crude stocks, increased by about 700,000 barrels to 373.7 million barrels last week, the data revealed.
Over the same period, gasoline inventories also rose by approximately 3.3 million barrels to 233 million barrels. EIA data showed that US crude oil production increased by 38,000 barrels per day (bpd) to around 13.72 million bpd during the week ending July 12.
US crude oil imports also rose by 277,000 bpd to about 7.04 million bpd, and exports fell by 35,000 bpd to approximately 3.96 million bpd over the same period.
In the Short-Term Energy Outlook (STEO) released on July 9, the EIA predicted that crude oil output in the country would reach an average of 13.25 million bpd this year.
Next year, crude oil output in the country is expected to reach 13.77 million bpd. The Fed is getting closer to an interest rate cut as inflation is slowing, Fed Governor Christopher Waller said Wednesday. expectation that the Fed will start reducing policy interest rates soon also supportsthe idea that economic activity in the country will increase.
The US Federal Reserve is expected to cut interest rates in December, following an anticipated reduction in September, with the European Central Bank likely to follow suit during the same period.
Conflict continues in the Middle East, where most of the global oil reserves are located. There is concern that ongoing conflict may cause disruption in global oil supply and continue to push oil prices up.
Israel’s attacks on the Gaza Strip and conflicts in the Red Sea, which is critical for global maritime trade, continues to affect prices. Israel, which has been attacking Gaza Strip since Oct. 7, 2023, is also fighting with Lebanese Hezbollah on the northern border.
