Oil prices today: Brent, WTI trade steady after uptick on US inventory drop
Oil prices steadied in the international markets on June 29, a day after rising sharply on a bigger-than-expected fall in U inventories, as attention shifted back to rising interest rates denting global economic growth. Even though rate hike fears offset gains, oil found support in the previous session from American Petroleum Institute data which showed that US crude inventories fell by about 2.4 million barrels.
Brent crude futures was up 10 cents, or 0.1 per cent, to $74.13 a barrel. US West Texas Intermediate (WTI) crude futures rose 11 cents, or 0.2 per cent, to $69.67 a barrel. Benchmark Brent crude prices are down more than 15 per cent so far this year as rising interest rates has hit investor appetite.
Both benchmarks also gained about three per cent on June 28 after the US Energy Information Administration (EIA) said crude inventories dropped by 9.6 million barrels in the week ended June 23, far exceeding the 1.8-million barrel draw which analysts had forecast in a poll conducted by news agency Reuters.
Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a July 19 expiry, was last trading higher by 1.01 per cent at ₹5,784 per bbl, having swung between ₹5,695 and ₹5,809 per bbl during the session so far, compared to their previous close of ₹5,726 per bbl.
Also Read: Brent’s price structure shows over-supply concern; weaker growth outweighs Saudi output cut
What’s affecting oil prices?
The current uptick in prices will not likely sustain as concerns about the impact that rising interest rates will have on economic growth came back to the fore. Leaders of the world’s top central banks reaffirmed on Wednesday that they think further policy tightening will be needed to tame stubbornly high inflation but still believe they can achieve that without triggering outright recessions.
US Federal Reserve Chair Jerome Powell has not rule out further hikes at the central bank’s next meeting, while European Central Bank President Christine Lagarde cemented expectations for a ninth consecutive rise in euro zone rates in July. Adding to pressure on crude oil, the annual profits at industrial firms in China, the world’s second-biggest oil consumer, extended a double-digit decline in the first five months as softening demand squeezed margins.
“The lack of prospects for fuel demand growth has limited the gain in oil prices, even with supply curbs by oil producers,” Tetsu Emori, CEO of Emori Fund Management Inc told Reuters.
Meanwhile, concerns of oil traders and analysts have shifted from under-supply to over-supply, the futures contract structure of the global benchmark Brent showed on June 28, as expectations of a weak economic growth outweigh Saudi Arabia’s output cuts.
Saudi Arabia has said it will cut its output in July, deepening the impact of a broader deal among members of the Organization of the Petroleum Exporting Countries and its allies including Russia (OPEC+) to limit supply into 2024. Benchmark Brent’s six-month backwardation reached its lowest since December, but still indicated higher demand for immediate delivery, according to Reuters.
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Updated: 29 Jun 2023, 08:21 PM IST
