Crude oil prices were moving higher in early trade on Thursday after tumbling on Wednesday afternoon.
Despite the Federal Reserve’s decision to keep interest rates unchanged, oil prices dropped on Wednesday. News of a significant inventory build from the EIA combined with warnings from the Fed of another two hikes by the end of the year added downward pressure to oil markets.
While the market was slow to react to the EIA’s report of a hefty crude oil inventory build for the week to June, along with builds in both gasoline and middle distillates, Brent crude did eventually fall below $73 and WTI nearly broke below $68.
The downward trend for oil prices appears to have been halted on Thursday as traders turn their attention to China which is set to announce May retail sales figures as well as industrial production data.
Both reports should provide a glimpse into oil demand prospects in the world’s biggest importer and soon-to-be biggest refiner, per the latest report of the International Energy Agency. Disappointing results may push Beijing to take further action to shore up the country’s recovery.
One thing is certain, and this is the fact that China’s oil demand will continue to grow at least until 2028. The question, however, is how strong the growth rate will be, especially in the immediate term.
While China’s oil demand is certain to grow, there is nothing certain about oil demand in the eurozone. The ECB is expected to raise rates once again, which would bring them to the highest level in 22 years, Reuters reported, adding that the bank also indicated it could raise them further still.
Meanwhile, more investment banks revised their predictions for oil prices later in the year, with Goldman Sachs, Morgan Stanley, and Bank of America all cutting their predictions for oil prices citing Russian export resilience and uneven Chinese demand recovery.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
- Goldman Sachs Slashes Year-End Oil Price Forecast To $86
- Saudi Arabia’s Unsuccessful Attempt To Boost Oil Prices
- Iran Plans To Create A Regional Natural Gas Hub