Oil prices were mostly stable Thursday as markets awaited U.S. crude oil inventory data; But US economic activity has signaled that borrowing costs will remain high for longer, which is a blow to demand.
Brent futures were down 4 cents, or 0.05%, at $83.56 a barrel at 03:30 GMT, while West Texas Intermediate (WTI) crude was down 10 cents, or 0.13%, at $79.13 a barrel.
The broad risk aversion environment has led to downward pressures on oil prices, which have compounded larger-than-expected declines in US crude oil inventories based on recent API data.
Crude oil and gasoline stocks in the United States fell last week, while other distillates increased, market sources said, according to data from the American Petroleum Institute (API) on Wednesday.
Sources said API figures showed crude stocks fell by 6.49 million barrels in the week ending May 24, while gasoline stocks fell by 452,000 barrels and distillates rose by 2.045 million barrels.
Analysts had predicted that US energy companies would remove 1.9 million barrels of crude oil from storages and stockpile 0.4 million barrels of distillates and 1 million barrels of gasoline.
Data from the U.S. Energy Information Administration (EIA) will be released later Thursday.
Rising global oil stocks through April due to soft fuel demand could strengthen OPEC+ producers’ case for keeping supply cuts in place at the OPEC+ meeting on June 2.
Pricing could revolve around the upcoming OPEC+ meeting, which is a bigger driver for oil prices. OPEC+ members could potentially extend current production cuts through the end of the third quarter to support prices.
Brent fell to its lowest level in more than three months on May 23, as oil markets were under pressure on expectations that the Fed would keep interest rates higher for longer.
According to the Fed survey, economic activity in the United States continued to expand from early April to mid-May, but firms appeared to be more pessimistic about the future as inflation rose at a moderate pace.
Higher borrowing costs tend to constrain funds and consumption; This is a negative situation in terms of raw demand and prices. The Fed is expected to cut interest rates in September at the earliest, compared to what markets expected in early June.
