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Oil prices have experienced wild intraday swings due to traders’ reactions to Federal Reserve Chair Powell’s comments, highlighting the nervous sentiment in crude markets. The trading day saw oil prices fluctuating, initially rising above $82 a barrel after Powell remarked on the cooling of the labor market. However, the lack of clear indications regarding future rate cuts led to a reversal of these gains. The anticipation around Thursday’s CPI data adds to the market’s cautious stance, reflecting the significant impact of macroeconomic indicators on commodity prices.
The recent American Petroleum Institute (API) report has introduced a fresh dynamic into the oil trading sphere by indicating a larger-than-anticipated draw in crude stocks, alongside declines in gasoline inventories for the second consecutive week. The report detailed a decrease in crude oil by 1.9 million barrels, surpassing expectations, as well as a significant drawdown in Cushing and gasoline inventories. Despite these figures suggesting a tightening in supply, distillate stocks saw an increase, complicating the market’s outlook. WTI oil prices managed to recover from one-week lows following the report, though the overall sentiment remains cautious amid mixed signals from inventory data and the global economic landscape.
Further influencing oil prices are the contrasting developments on the supply side, with Russia’s crude exports experiencing the most substantial weekly drop since before its 2022 invasion of Ukraine. This unexpected decline from major ports has contributed to bullish sentiment, although the reasons behind this sudden decrease remain unclear. On the one hand, forecasts for higher fuel consumption during the Northern Hemisphere’s summer support oil prices. On the other hand, concerns about Chinese demand, underscored by slumping supertanker earnings, underscore the complexities facing the oil market. Additionally, the recovery progress in Houston after storm Beryl adds to the bearish pressure, though its full impact on oil dynamics is yet to be seen. This tug-of-war between positive and negative factors continues to keep traders on their toes, with weather-related developments and geopolitical shifts factoring into the volatile price landscape.
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