Oil prices down on demand woes as markets await U.S crude stockpiles data
2024.05.29 21:06
By Katya Golubkova
TOKYO (Reuters) – Oil prices were down on Thursday as the markets wait on the latest oil stockpiles data while resilient U.S. economic activity pointed to borrowing costs staying higher for longer in a potential blow to demand.
futures lost 9 cents, or 0.1%, to trade at $83.52 a barrel, while U.S. West Texas Intermediate (WIT) crude was down 3 cents, or 0.04%, to $79.19 at 0046 GMT.
U.S. crude oil and gasoline inventories fell last week while distillates rose, according to market sources citing American Petroleum Institute figures on Wednesday.
The API figures showed crude stocks were down by 6.49 million barrels in the week ended May 24, the sources said, with gasoline inventories down by 452,000 barrels, and distillates up by 2.045 million barrels.
This comes against analysts projection of U.S. energy firms pulling 1.9 million barrels of crude out of storage while stocking 0.4 million barrels of distillates and 1 million barrels of gasoline.
The date by U.S. Energy Information Administration (EIA) is due later on Thursday.
“Any sign of strong demand in EIA’s weekly inventory report should support crude oil prices,” ANZ Research said in a note.
Rising global oil inventories through April due to soft fuel demand may strengthen the case for OPEC+ producers, which include the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, to keep supply cuts in place when they meet on June 2, OPEC+ delegates and analysts say.
Oil markets have been under pressure recently over expectation the Federal Reserve will keep interest rates higher for longer.
U.S. economic activity continued to expand from early April through mid-May but firms grew more pessimistic about the future while inflation increased at a modest pace, a Fed survey showed.
Higher borrowing costs tend to tie down funds and consumption, a negative for crude demand and prices. The Fed is now seen cutting rates in September at the earliest, compared to a June start to easing cycle expected by markets at the start of the year.
