Crude oil losses continue on lower demand concerns, higher oil stocks

Oil prices are reversing more quickly than expected as US reserves surge. The prospect of longer-term higher interest rate environment is raising worries about a decline in crude oil prices. The impact of geopolitical concerns has been mitigated by these fears. On Wednesday, there will be a significant decline in oil prices to offset some of the gains in the previous three months. Following a moment of hesitancy caused by the Fed’s more optimistic outlook for the longer term as well as higher-than-expected US oil stocks, WTI crude futures fell down on Wednesday, it is trading at $82.18 per barrel, down -2.93% at the time of writing. Moreover, Brent crude oil is trading at $86.79 per barrel, down -2.74%.

US oil reserves rose by 2.735 million barrels in the week of April 12 compared to 5.841 million barrels the previous week and 1.65 million barrels over estimates, according to the weekly EIA data.

Following Jerome Powell’s warning that the Fed may still need to struggle to raise inflation to the 2% objective, crude stock prices have increased. These remarks imply that interest rates will stay low for an extended period of time, which is predicted to slow economic expansion and affect the demand for oil.

This has neutralized the gains in crude that came from growing geopolitical threats and news that the US was threatening to reimpose the oil embargo on Venezuela in the event that President Maduro broke his pledge to hold free and fair elections this year.

Even while today’s negative response points to a more substantial correction, the overall trend is still favourable. If there’s confirmation below prior highs at $82.85, the bears will turn their attention to the $80.50 region. Bulls should recover the $84.90 mark to turn the market’s attention back towards the YTD high, which is now at $87.60.