Oil after the Opec decision and US inventories

The American Petroleum Institute (API) report revealed a modest increase of 423,000 barrels in US crude stocks for the week ending March 1, signific...

author: Economician

published:Mar 6, 2024 19:36

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category:commodities

The American Petroleum Institute (API) report revealed a modest increase of 423,000 barrels in US crude stocks for the week ending March 1, significantly lower than the 2.1 million barrel increase expected by analysts in a Reuters poll. Subsequently, the official Energy Information Administration (EIA) report also indicated a smaller-than-expected rise in inventories, with a 1.367 million barrel increase, compared to market expectations exceeding 2.4 million barrels. The previous week saw a surge of 4.199 million barrels.

A Reuters survey on Thursday disclosed that OPEC members pumped 26.4 million barrels per day in February, up by 90,000 barrels per day from January. Despite this slight increase in production, bullish sentiment persisted, fueled by geopolitical tensions in the Red Sea region and the convening of the 14th National Committee of the Chinese People's Political Consultative Conference (CPPCC). Escalating tensions in the Red Sea area raised concerns about potential spillover conflicts in the Middle East.

Meanwhile, Saudi Arabia, the world's largest oil exporter, announced marginally higher prices for April crude sales to Asia, its largest market. Additionally, China unveiled a 5% economic growth target for 2024. Although details regarding China's strategy to achieve this growth target remain scarce, the Chinese government's commitment to economic expansion bodes well for the energy market.

In prepared remarks preceding two days of testimony before lawmakers, Federal Reserve Chair Jerome Powell emphasized that while the Fed's policies have successfully mitigated price pressures, policymakers require "greater confidence" that inflation is sustainably moving toward the 2% target. Powell reiterated that in the near future, the Federal Open Market Committee does not foresee a reduction in interest rates from their current two-decade highs.

Market participants are eagerly awaiting US employment data on Friday to glean insights into future Fed policies. For now, fundamental data indicate a focus on maintaining and possibly bolstering prices. Technically, the market trend remains bullish, with a pivot point of $76.70 and robust support at $73.