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West Texas Intermediate traded above $87 a barrel after swinging between gains and losses. The IEA sees global oil consumption rising by about 110,000 barrels a day less than its previous forecast this year, though it still anticipates a 2 million barrel-a-day increase.
The report followed a bumpy 24 hours. On Tuesday hotter-than-expected US inflation prompted investors to bank on a continued path of sharp interest rate hikes. Meanwhile the US was said to be mulling buying oil below $80 to refill its strategic oil reserve after releases this year, while an industry survey pointed to a hefty expansion of separate commercial stockpiles.
Oil hit the lowest since January earlier this month as traders attempted to price in a possible global slowdown, tighter monetary policy, and lower energy demand. The potential for further interest rate hikes have bolstered the case for slower growth, while commodity markets broadly are wrestling with lower liquidity.
“The market seems to be well and truly stuck with no clear direction for the time being,” said Ole Hansen, head of commodities strategy at Saxo Bank. “The market is getting even more concerned central banks led by the FOMC could tip the global economy over the edge in their pursuit of lower inflation.”
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The industry-funded American Petroleum Institute reported US commercial crude stockpiles expanded by 6 million barrels last week, according to people familiar with the figures. Government data due Wednesday will provide greater clarity. The holdings — separate from the Strategic Petroleum Reserve — jumped by 8.8 million barrels in the previous period.
US strategic reserves have plunged this year, hitting the lowest in almost 40 years, after President Joe Biden ordered the release of 180 million barrels to counter the inflationary fallout spurred by Russia’s invasion of Ukraine. Now, the US may start restocking the emergency reserve when crude dips below $80, people familiar with the matter said.
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