Crude oil lower; U.S. CPI and SPR release weigh
2023.02.14 10:58
© Reuters.
Investing.com — Oil prices fell Tuesday after the Biden administration announced additional crude sales from the U.S. Strategic Petroleum Reserve, while U.S. inflation grew more quickly than expected last month.
By 09:00 ET (14:00 GMT), futures traded 1.6% lower at $78.90 a barrel, while the contract fell 1.2% to $85.57 a barrel.
Data released earlier Tuesday showed that in the U.S. grew at a slower pace in January, with the annual figure coming in at 6.4% from 6.5% in December.
However, this uptick was still above the 6.2% growth expected, and the widely-watched year-on-year , which takes out volatile items like energy and food, came in at 5.6%, down from 5.7% in the prior month but still ahead of economists’ predictions of 5.5%.
This inflation report suggests that inflation is proving sticky even after the authorized a series of interest rate hikes in an attempt to quell inflation. This could result in a higher end point for these increases, potentially causing the U.S. economy, the largest consumer of crude in the world, to fall into recession this year.
The crude market had started the day on the backfoot after the U.S. government announced late Monday that it will sell an additional 26 million barrels of crude from the SPR as part of a release mandated by Congress.
This sale comes after the Department of Energy released a record 180M barrels from the reserve last year to combat rising fuel prices.
“There had been suggestions in recent weeks that the U.S. administration would cancel or at least delay this release, after large emergency releases last year,” said analysts at ING, in a note. “These have left SPR stocks at a little less than 372MMbbls – the lowest level since 1983.”
The Organization of Petroleum Exporting Countries trimmed its supply outlook for this year in its latest , but also raised its demand estimate, resulting in a slightly tighter global oil market, according to its estimates.
Russia has already said it will cut its output by 500,000 barrels a day from March, and OPEC members look unlikely to boost output to fill in for the cutbacks announced by Moscow.
“Key to oil demand growth in 2023 will be the return of China from its mandated mobility restrictions,” OPEC said.
The is set to release its estimate of U.S. crude inventories later in the session.
