Markets Driven by Risk-Averse Sentiments Lead Oil to Lose Grip on $80
Oil prices dropped after the US inventory report didn't ease concerns about demand. Traders are anticipating the release of economic data later in the day.
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The price of West Texas Intermediate oil decreased by 3% because of an increase in the value of the dollar and a decrease in willingness to take risks. It is currently priced below $80 per barrel. The market's uncertainty about the level of demand is the main issue now, which is making it challenging for OPEC's production cuts to have a noticeable effect. The cuts are set to start in May.
Rebecca Babin, a high-ranking energy trader at CIBC Private Wealth, mentioned that the release of the Energy Information Administration data on Wednesday did not allay worries about the vulnerability of product demand. She stated that the market is intently concentrating on product demand, and these numbers do not provide strong confidence among traders. Although the report's statistics were not terrible, they were not adequately notable to guarantee a peaceful slumber for traders at night.
Last week, there was a decrease of 4.6 million barrels in inventories across the country. Additionally, the supplies at the major storage center located in Oklahoma, known as Cushing, also dropped and are currently at the lowest point they have been since the start of this year.
Although there has been a decrease, the cost of crude oil is still higher compared to the lowest point it reached 15 months ago when the banking sector faced instability. The announcement from OPEC+ regarding the limitation on the production of oil and decreased flow from Iraq caused the value of oil to go back up to around $80. The group of oil producers intends to compel consumers to use their stored oil to raise prices, as they anticipate slow growth in demand.
The Federal Reserve's economic survey which is due to be released later today will be closely monitored for clues on the state of the US economy and the monetary policy going forward.
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Assisted by Natalia Kniazhevich, the blog section has been rewritten in a more accessible form of English.
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