empty
21.12.2023 06:44 AM
Oil prices are falling due to increasing inventories in the US: what to expect from demand?

This image is no longer relevant

According to the data, Brent crude oil futures dropped by 0.8%, reaching $79.05 per barrel by 01:20 GMT, while the American West Texas Intermediate fell by 0.7%, trading at $73.67 per barrel.

The previous day saw oil prices rise due to concerns about potential trade issues as major maritime carriers opted to steer clear of routes through the Red Sea, resulting in increased transportation and insurance costs.

However, activity in the oil and gas industry remained almost unchanged in the fourth quarter, as per a survey by the Federal Reserve Bank of Dallas. This led to diminished optimism amid escalating uncertainty.

Economist Kunal Patel from the Bank highlighted that declining average oil prices and questions regarding OPEC's ability to influence these prices became key factors contributing to the uncertainty.

According to senior economist at the NLI research institute, Tsuyoshi Ueno, the significance of the Red Sea to the market remains limited until oil flows into the Strait of Hormuz.

The US Energy Information Administration (EIA) reported a 2.9 million barrel increase in US crude inventories for the week ending December 15, surpassing analysts' expectations. Concurrently, US oil production set a new record at 13.3 million barrels per day.

It's important to note that approximately 12% of global traffic passes through the Red Sea and the Suez Canal. Nonetheless, its impact on oil supplies is limited for now, as the majority of Middle Eastern oil exports transit through the Strait of Hormuz.

"At this stage, given the absence of additional production cuts from OPEC+ this year, it is likely that oil prices will remain near current levels until the end of the year. Attention will focus on key economic statistics and the US dollar's reaction to them," noted Naohiro Niimura, a partner at Market Risk Advisory, a research and consulting firm.

He predicts WTI prices will fluctuate between $70 and $75 this month.

The coalition led by the US, setting price limits on Russian oil transported by sea, announced changes in compliance with requirements on Wednesday. The Finance Ministry believes these changes will make it difficult for Russian exporters to bypass the set limitations.

According to the latest Energy Information Administration figures released on Wednesday, total US oil production hit a record level of 13.3 million barrels per day.

Thomas Frank,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Wall Street on the rise: Nasdaq soars 2.74%, tech leads market higher

Procter & Gamble, PepsiCo fall after forecast cuts Hasbro, ServiceNow jump after results March durable goods jump more than expected Alphabet beats revenue estimates, shares rise after hours Asian markets

Thomas Frank 07:15 2025-04-25 UTC+2

Earnings parade: From Adidas sneakers to Boeing jets, quarterly reports push the market

Indices up: Dow 1.07%, S&P 500 1.67%, Nasdaq 2.50% Bessent calls US-China tariffs unsustainable, Trump open to talks Tesla, Boeing rise after quarterly results European stocks fall as investors weigh

Thomas Frank 13:15 2025-04-24 UTC+2

US Market News Digest for April 24

US stock indices, including the S&P 500 and Nasdaq 100, posted solid gains on optimism about progress in trade negotiations. Despite the lack of a clear position from the White

Ekaterina Kiseleva 11:05 2025-04-24 UTC+2

Trump acts, markets react: Nikkei up 2%, USD rallies

The Nikkei surged more than 2%, S&P 500 futures extended their rally, and the dollar jumped after US President Donald Trump said he has no plans to fire Fed Chairman

12:35 2025-04-23 UTC+2

US Market News Digest for April 23

The US market is showing renewed signs of instability. Positive signals about a potential de-escalation in the trade conflict with China are fueling hope, but experts warn against excessive optimism

Ekaterina Kiseleva 12:17 2025-04-23 UTC+2

Trump says markets react: Nikkei up 2%, dollar strengthens, China awaits outcome

Nikkei jumps more than 2%, S&P 500 futures continue rally Dollar jumps as Trump says he has no plans to fire Powell Hopes for China tariff easing, but no deal

Thomas Frank 10:52 2025-04-23 UTC+2

US Market News Digest for April 22

The S&P 500 and Nasdaq 100 continue to slide as mounting concerns over slowing economic growth and the impact of trade tariffs weigh on sentiment. The market remains volatile, with

Ekaterina Kiseleva 11:13 2025-04-22 UTC+2

Trump, Fed, and gold at $3,000? Markets respond to alarming signals

Investors are worried about the Fed's independence under Trump. US assets are falling, and the dollar is at a three-year low against the euro. Safe-haven currencies like

11:46 2025-04-21 UTC+2

US Market News Digest for April 21

The S&P 500 and Nasdaq slipped once again after Donald Trump lashed out at the Federal Reserve. His comments called the independence of the central bank into question, amplifying inflation

Ekaterina Kiseleva 11:41 2025-04-21 UTC+2

Trump, Fed, $3,000 Gold? Markets React to Red Flags

Investors Worried About Trump Fed Independence US Assets Fall, Dollar Hits Three-Year Low Against Euro Safe-Haven Yen, Swiss Franc Rise Gold Hits New Record High South Korea Stock Market

Thomas Frank 10:18 2025-04-21 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.