NextGen Day

On Wednesday, oil prices went down because of two things: an expected rise in crude oil stocks in the US and growing fears about more interest rate hikes in the US.

At 9:48 a.m. local time (0648GMT), the price of the international benchmark Brent crude was $79.64 per barrel. This was a 0.57 percent drop from the previous trading session’s closing price of $80.10 per barrel.

At the same time, the American benchmark West Texas Intermediate was trading at $74.63 per barrel. This was a 0.65 percent drop from the last session, which ended with a price of $75.12 per barrel.

The market was expecting a drop of 2.4 million barrels, but the American Petroleum Institute said late Tuesday that US crude oil stocks would rise by nearly 14.9 million barrels.

The new projection of a huge increase in crude stocks made investors nervous because it showed that crude demand in the US, which uses the most oil in the world, was falling. This made oil prices go down.

Concerns about weak US demand grew after Jerome Powell, the head of the US Federal Reserve said on Tuesday that restoring price stability when inflation is high can require “measures that are not popular in the short term” as interest rates are raised to slow the economy.

Last year, the Fed raised the benchmark interest rate seven times by a total of 425 points. This was one of the most aggressive times in the history of monetary tightening. The goal was to stop inflation, which reached its highest level in more than four decades last summer.

Hopes for demand in China make investors hungry.

China released a second set of crude oil import quotas for 2023. Compared to the same time last year, the total for this year has gone up by 20%.

In an email, Australia and New Zealand Banking Group Commodity Strategist Daniel Hynes said that China’s increasing crude import quotas show that the world’s largest importer is ramping up to meet higher demand.

“It also seems to be bringing in a wider range of crude from Russia. Three loads, including the less popular Arco grade, were bought “he added.

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