Oil Down as Markets Await U.S. Inflation Data

© Reuters.

By Zhang Mengying

AiVIF.com – Oil was down on Wednesday morning in Asia while investors looked toward U.S. inflation data that could weaken the market.

Brent oil futures inched down 0.01% to $99.47 by 01:08 AM ET (0509 GMT) and crude oil WTI futures edged down 0.13% to $95.72.

Investors now await U.S. Consumer Price Index (CPI) for more clues on the U.S. Federal Reserve’s monetary policy path, which is due later in the day. Analysts predicted that the print would hit a 40-year high in June from a year earlier, the largest jump since 1981.

Investors are worried that aggressive interest rate hikes to tame inflation will spur an economic downturn that will hit oil demand.

“Lingering recession fears continue to hit the market, whilst the strength of the USD and flare-up in Covid cases in parts of China is certainly not helping,” ING head of commodities strategy Warren Patterson told Reuters.

The market is also looking at U.S. President Joe Bident’s visit to the Middle East, where he is expected to ask Saudi Arabia and other Gulf producers to raise oil output to help bring down energy prices.

On the demand side, renewed COVID-19 travel curbs in China also weighed on the market as multiple cities in the world’s second-largest economy have adopted fresh restrictions to rein in new infections from a highly infectious subvariant of the virus.

The Organization of the Petroleum Exporting (OPEC) expected that global oil demand would rise in 2023 and the market could remain tight. It said that its members need to have an additional 900,000 bpd of oil to meet the need in 2023 from 2022.

Tuesday’s U.S. crude supply data from the American Petroleum Institute showed a build of 4.762 million barrels for the week ended July 8.

Investors now await crude supply data from the U.S. Energy Information Administration, due later in the day.