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Wednesday, August 17, 2022

Oil prices rise ahead of US stockpiles report

Oil prices rose in Asian trade Wednesday but faced pressure from US demand fears and speculation over the future of the Federal Reserve’s stimulus programme, analysts said.

New York’s main contract West Texas Intermediate (WTI) for December delivery gained 41 cents to $93.78 a barrel in mid-morning Asian trade, after sinking $1.25 to close at a five-month low in New York.

Brent North Sea crude for December climbed 45 cents to $105.78.

“Investors will be closely watching the EIA (Energy Information Administration) stockpile numbers out later Wednesday that is likely to show a further supply surge in the US internal market,” David Lennox, resource analyst at Fat Prophets in Sydney, told AFP,

“Investors have gotten somewhat used to the high stockpile numbers in the US, but we have also seen the WTI come off weaker when there is a drastic increase, such as immediately after the summer driving season.”

The EIA is expected to report US supplies increased 1.9 million barrels in the week ending November 1, according to analysts polled by Dow Jones Newswires.

Inventories in the United States have risen for the past six weeks, to about 28 million barrels, raising concerns about oversupply in the world’s largest economy and top crude consumer.

Lennox added that market was also looking ahead to Thursday’s release of US third-quarter gross domestic product (GDP) advanced estimates.

The result will give investors a better idea about the Fed’s plans for its stimulus programme, with strong growth expected to tilt the bank towards an earlier wind down.

Upbeat US service sector data Wednesday added to expectations it will start cutting back on its $85 billion-a-month bond buying either next month or early next year.

The central bank has previously said any pullback on the scheme — credited with helping prop up global equity markets — hinges on a firm US economic recovery.

Any tapering would likely send the greenback higher, in turn making dollar-priced oil more expensive to people using other currencies.

Source: AFP

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