Oil fell on a massive rise in US crude stockpiles and signs from the Federal Reserve that rate hikes will continue crushed the risk-on sentiment that prevailed earlier in the day.
West Texas Intermediate settled below $69 after gaining more than $2 during the session. Prices reversed earlier gains after U.S. inventories rose 7.92 million barrels and inventories at the key storage hub in Cushing, Oklahoma rose to the highest since 2021. Many Wall Street banks have lowered their oil price estimates, largely because they see inventories rising and overshooting. demand
Federal Reserve officials on Wednesday halted interest rate hikes after 15 months of hikes, but signaled they would likely resume tightening to cool inflation. The prospect of further hikes has raised concerns about a recession that will reduce demand.
“The market is looking for a line of sight to the end of the hiking cycle to get some confidence and get some fundamental investors back,” said Rebecca Babin, senior energy trader at CIBC Private Wealth. The prospect of more hikes in the second half “does not ease fears about macro headwinds for crude”.
Crude has been largely capped since early May as stubbornly high Russian supplies and concerns about global demand counter Saudi-led OPEC+ efforts to curb output. JPMorgan Chase & Co. became the latest oil bull to cut its forecast on Wednesday, with the bank saying OPEC+ action will no longer balance markets this year.
Global oil markets may tighten “significantly” in the coming months as China’s fuel consumption recovers from the pandemic amid OPEC+ curbs, the International Monetary Fund said on Wednesday Energy in a report. Earlier, a large batch of Chinese crude import quotas also boosted the outlook for consumption in the world’s second-largest economy.
|
Prices:
|
|
