Crude Oil Prices Climb On Falling Stockpiles, Brighter Demand Outlook

Crude oil prices advanced modestly during the APAC morning session after gaining 1.36% overnight. The American Petroleum Institute (API) reported a larger-than-expected draw in crude oil inventories, sending prices higher. Stockpiles fell 3.608 million barrels for the week ending April 9th, compared to a 2.889-million-barrel decline forecast. This marks a third consecutive weekly fall in America’s crude inventories, pointing to a recovery in refinery activity and underlying demand.

OPEC raised its forecast for global oil demand growth this year to 5.95 million bpd in its monthly report released on Tuesday, saying that “the recovery is very much leaning towards the second half of 2021”. This marks a 70,000 bpd rise from its prior forecast. The oil cartel’s recent decision to gradually unwind production cuts to meet rising energy needs, alongside a brighter demand outlook, boosted investor confidence. The WTI is trading at US$ 60.58 mark, the highest level seen in more than one week.

US Bureau of Labor Statistics released stronger-than-expected inflation figures on Tuesday, underscoring robust economic activity as businesses gradually returned to normal. The headline Consumer Price Index (CPI) climbed 2.6% YoY, largely attributed to rising energy (+13.2%) prices. On a seasonally adjusted basis, the CPI index rose 0.6% YoY, marking an eight-year high.

US CPI – March 2021, Not Seasonally Adjusted

Crude Oil Prices Climb on Falling Stockpiles, Brighter Demand Outlook

Source: bls.gov

While recent economic data pointed to a strong economic rebound in the US and China, uneven distribution of Covid vaccines around the globe and another viral wave hitting India – the world’s third-largest importer for crude oil – cast a shadow on the demand outlook. The pause in the rollout of Johnson & Johnson’s vaccine in Europe may hinder the inoculation campaign in the region.

Looking ahead, the Energy Information Administration (EIA) will report weekly inventories data later today. Markets anticipate a 2.7-million-barrel draw in America’s stockpiles, marking a third consecutive weekly decline. A larger-than-expected fall may serve to underpin crude oil prices, whereas a smaller draw or rise would likely do the reverse (chart below). Thursday’s US retail sales and Friday’s Chinese Q1 GDP data will be closely eyed by traders too.

1 2
View single page >> |

Disclaimer: DailyFX, the free news and research website from IG, is one of the world's leading sources for news and analysis on the ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.