Oil prices experienced a consecutive decline on Wednesday as an unexpected increase in US crude inventories intensified concerns about demand, following lackluster economic data from the world’s top two oil consumers, the United States and China.
Brent crude futures dropped by 0.7%, equivalent to 49 cents, settling at $74.42 per barrel. Meanwhile, US West Texas Intermediate crude fell by 0.8%, or 55 cents, to $70.84 by 0657 GMT.
According to Edward Moya, an analyst at OANDA, “Crude prices remain under pressure due to ongoing worries about global demand. Despite the optimism surrounding China’s performance in the second half of the year, the current circumstances are too disappointing.”
Market sources, citing figures from the American Petroleum Institute, reported that US crude stockpiles rose approximately 3.6 million barrels in the week ending on May 12, contrary to expectations of a 900,000 barrel drawdown, as predicted by seven analysts surveyed by Reuters.
Later today, at 1430 GMT, the US government is set to release data on crude and product stockpiles, which will add to concerns about US economic growth. Recently released data indicated that retail sales in April increased by only 0.4%, falling short of the anticipated 0.8% rise.
Ongoing discussions regarding the US debt ceiling have also contributed to the market’s unease. The US Treasury Department has warned that unless Congress raises the ceiling, the United States may face a severe default as early as June 1.
China’s economic indicators for April revealed underwhelming industrial output and retail sales growth, suggesting a loss of momentum at the beginning of the second quarter.
Analyst Tina Teng from CMC Markets stated, “Sentiment soured due to stalled U.S. debt ceiling talks and disappointing earnings from retailers. Concerns about a potential recession once again weighed on global markets.”
The forthcoming meeting of the Group of Seven (G7) leaders in Japan on May 19-21 has attracted close attention from market participants. There is anticipation that the G7 will discuss expanding sanctions on Russia, with a focus on combating sanctions evasion involving third countries.
The objective is to restrict Russia’s future energy production and curb trade that supports the country’s military, as revealed by officials with direct knowledge of the discussions.
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