Crude oil prices turned around on Thursday, erasing most of the week’s earlier losses despite the latest EIA report that indicated crude oil inventories rose more than expected.
WTI was sent back up above the $70 threshold to $70.96—a $2.87 (+4.22%) rise on the day. The Brent crude oil benchmark had risen $2.58 (3.55%) per barrel to $75.18. While it hasn’t erased all of the week’s losses, it has recouped more than half.
This week has been a rollercoaster for crude oil prices, first sent spiraling downward at the beginning of the week before reclaiming much of the lost ground toward the end. Forces at play in the oil markets this week are the ever-present China demand outlook, OPEC+’s upcoming meeting, the Fed’s future interest rate plans, rising U.S. crude oil inventories, and Russia’s mysterious crude oil production levels. Another significant force is the signs that U.S. lawmakers are on track to come up with a deal on the debt ceiling that would allow it to keep paying its bills.
China’s oil demand has been somewhat of a disappointment compared to bullish manufacturing outlooks that have failed to materialize in full. While China’s oil demand has indeed been on the rise, manufacturing activity in the world’s top oil importer has been lackluster compared to projections. This has pulled down crude oil prices—or, at a minimum, capped gains.
OPEC+ has had a more ostentatious if not more important role in dictating crude oil pricing, with the group threatening speculators who bet against oil with further production cuts and kicking out media from OPEC+ press conferences next week. The overarching feeling in the market is that OPEC+ will not change production plans, but the $74 handle for Brent is likely below the comfort level of most OPEC+ levels, leaving some to believe another cut is inevitable.
Next the Feds signaled on Wednesday that it could pause rate hikes for June. On Wednesday, the EIA reported a significant jump in crude oil inventories that would typically have dragged prices down. But not today.
WTI stood at $70.67 at 12:07 pm ET.
By Julianne Geiger for Oilprice.com
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