After the U.S. government announced it will release additional crude oil out of its Strategic Petroleum Reserve, oil prices dropped on Tuesday. Traders are now keeping an eye on U.S. inflation statistics in expectation of further declines.
By 1005 GMT, Brent crude futures had down by 80 cents, with 0.9%, at $85.81 per barrel. Whereas U.S. crude futures had decreased by $1.05, with 1.3%, at $79.09 per barrel. The highest daily percentage decrease for both benchmarks since February 3 is foreseen.
The SPR that is already at the lowest point since 1983 will sell 26 million barrels of oil. According to the US Department of Energy (DOE).
When U.S President Joe Biden’s government released a whopping 180 million barrels from reserve last year. The DOE has thought about cancelling the sale for the FY 2023. However, to amend the mandate, Congress would have needed to take action.
Crude Oil Futures: “Prices Dropped as additional Reserves Released & Inflation Pressure”
After the Energy Information Administration predicted record March output from the seven largest U.S. shale basins, supply fears also eased.
Following a severe earthquake that shook the region, crude exports at a significant Turkish port restarted.
Both the International Energy Agency (IEA) and Organization of the Petroleum Exporting Countries (OPEC) is expect to publish their monthly reports later on Tuesday.
Additionally, traders will be searching for hints in the critical U.S. consumer price index (CPI) figures for Jan released on Tuesday. Consumer price in the United States (U.S.) increased during the preceding two months.
According to a Recent survey, most analysts believe that U.S. Federal Reserve will increase interest rates by at least two more times in the upcoming months. Risk assets like oil may be negatively impact by rising inflation and the accompanying rate hikes.
The looming “data tsunami” will have a significant impact on risk appetite in the short term. But inflation will finally be beaten, according to PVM economist Tamas Varga.
“The tight oil balance that the second quarter of the year will provide should be considerably supported by recovering Chinese development.“