Key points:

  • Oil prices fell due to expectations that high interest rates in the US will continue, which could negatively affect demand.
  • Brent futures fell 0.3% to $83.34 per barrel, WTI futures fell 0.3% to $79.00 per barrel.
  • US crude oil inventories fell by 6.49 million barrels over the week (API).

Oil prices showed a decline on Thursday. This was influenced by data showing continued economic activity in the US. These data increased expectations that high interest rates will remain high for an extended period, which could negatively impact oil demand.

Ahead of the release of US crude inventories data scheduled for the same day, Brent crude futures fell 26 cents (0.3%) to $83.34 a barrel. West Texas Intermediate (WTI) crude was also lower, losing 23 cents (0.3%) to $79.00 a barrel.

US oil reserves data

Oil benchmarks Brent and WTI are showing a downward trend, risking ending the month with significant losses. Brent futures could fall more than 5% from April, and WTI futures could fall more than 3%. Despite a larger-than-expected decline in U.S. crude oil inventories, according to API data, the factor was unable to withstand the pressure on the market.

API statistics recorded a decline in crude oil inventories for the week ending May 24 by 6.49 million barrels. Gasoline inventories decreased by 452 thousand barrels, and distillates – increased by 2.045 million barrels. Meanwhile, analysts predicted a more modest decline in crude oil inventories – 1.9 million barrels, as well as an increase in distillate inventories by 0.4 million barrels and gasoline – by 1 million barrels.

Upcoming OPEC+ meeting

The recent increase in global oil reserves, driven by demand for soft fuels, could be an argument in favor of maintaining OPEC+ production cuts at the meeting scheduled for June 2. Delegates and analysts report this.

Among the factors that could influence oil prices in the future is the upcoming OPEC+ meeting. Here, members of the organization could potentially extend current production restrictions until the end of the third quarter in order to support quotes.

Oil markets are under pressure due to expectations of a longer period of high interest rates set by the Federal Reserve. On May 23, the price of Brent oil reached its lowest level in more than three months.

According to the Federal Reserve survey, economic activity in the United States showed growth from early April to mid-May. However, companies became more pessimistic about the prospects, and inflation grew at a moderate pace. It is also expected that the Fed will cut rates no earlier than September, while at the beginning of the year the markets expected the reduction to begin in June.