After the Biden Administration announced further crude sales, oil prices fell.
Following the Biden administration’s announcement of further petroleum sales from the American Strategic Petroleum Reserve, oil prices fell on Tuesday. At 9:00 ET (14:00 GMT), the contract slid 1.2% to $85.57 a barrel, while futures were trading 1.6% down at $78.90 per barrel.
U.S. Inflation Rises More Rapidly Than Anticipated
The United States’ inflation rate increased last month at a greater rate than predicted, according to data released earlier that day. Inflation was 6.4% in January as opposed to 6.5% in December. Despite this rise, it remained greater than the 6.2% predicted growth rate. The annual rate, which excludes volatile goods like energy and food, came in at 5.6%, down from 5.7% in the preceding month but still higher than the economist’s forecast of 5.5%.
Inflation Remaining Sticky Despite Increases in Interest Rates
According to this research, inflation continues to be a problem even after the Federal Reserve approved a number of interest rate increases in an effort to stop it. This would result in higher endpoints for these increases, which might push the U.S. economy into a recession this year as the world’s biggest consumer of petroleum.
Following the SPR announcement, the crude market is off to a sluggish start.
After the U.S. government announced late Monday that it will sell an additional 26 million barrels of petroleum from the SPR as part of a release required by Congress, the crude market saw a sluggish start on Tuesday. Following significant emergency releases last year, analysts at ING remarked that there have been recent hints that the U.S. administration may postpone or cancel this release.
OPEC raises demand projections but reducing supply outlook
In its most recent report, the Organization of Petroleum Exporting Countries reduced its supply prediction for this year while increasing its estimate of demand, which it believes would result in a somewhat tighter global oil market. Russia has already stated that it will cut its production by 500,000 barrels per day starting in March, and other OPEC members are not expected to increase production to make up for the reductions. The return of China from its required mobility limitations would be crucial for the growth of the oil market in 2023, according to OPEC.