Oil is swinging in prices, fluctuating after the International Energy Agency trimmed its estimates on global demand and the United States mulled when to refill its strategic emergency oil reserves.
Prices edged higher today as the U.S. plan to refill emergency crude offset the drag from a stronger dollar and an industry report that pointed to a hefty increase in American commercial stockpiles.
It has been a bumpy 24 hours for oil. On Tuesday, the U.S. inflation — which was hotter-than-expected — prompted investors to bank on a continued path of sharp interest rate hikes.
The higher inflation figures have also set the scene for another round of aggressive rate hikes from the Federal Reserve as well as further gains in the dollar, which is already near a record.
The United States was said to be continuing to buy oil below $80 in order to refill strategic oil reserves. The reserves had some releases this year.
US strategic reserves have plunged this year, hitting the lowest in almost 40 years, after President Joe Biden ordered the release of 180 million barrels to counter the inflationary fallout spurred by Russia’s invasion of Ukraine.
The industry-funded American Petroleum Institute reported US commercial crude stockpiles expanded by 6 million barrels last week. This came as an industry survey pointed to a hefty expansion of separate commercial stockpiles.
Earlier this month oil hit its lowest level since January, as traders attempted to price in a possible global slowdown, tighter monetary policy, and lower energy demand.
There continue to be mixed signals over what the next steps will be, with officials also weighing an additional sale given that curbs on Russian oil are set to tighten.
Experts say the market seems to be well and truly stuck with no clear direction for the time being, and is going to get even more concerned central banks led by the FOMC potentially tipping the global economy over the edge in their pursuit of lower inflation.