Oil prices remained steady as investors carefully evaluated concerns surrounding the future demand for crude oil and eagerly awaited the release of the weekly U.S. supply data. The West Texas Intermediate crude for June delivery rose by 0.4% to reach $71.11 a barrel on the New York Mercantile Exchange, while the global benchmark, July Brent crude, increased by 0.3% to $75.13 a barrel on ICE Futures Europe. Other oil-related products, such as gasoline and heating oil, also experienced minor gains.
The recent decline in crude prices can be attributed to several market drivers. Disappointing economic data from China caused a drop in oil prices. WTI and Brent have suffered from four consecutive weeks of declines due to concerns about demand. According to Michael Tran, a commodity and digital intelligence strategist at RBC Capital Markets, oil prices have been caught between oversold territory and the absence of significant catalysts that could cause a substantial increase in prices in the near future. Real-time physical indicators in the market remain mixed, which adds to the uncertain outlook.
Market expectations were high for China's reopening to have a significant impact on oil prices. However, the anticipated boost has not materialized as expected. Michael Tran notes that the physical market has not shown meaningful improvements halfway through the second quarter. Additionally, peak turnarounds in the market are still over a month away. The mixed outcomes from China's reopening have further complicated the market dynamics, making it difficult for oil prices to gain a clear direction.
On Tuesday, according to a reliable source, the American Petroleum Institute revealed that U.S. crude inventories increased by 3.7 million barrels in the past week. However, gasoline stocks experienced a decline of 2.5 million barrels, and distillates declined by 900,000 barrels. These figures shed light on the current supply situation, which will be further clarified by the official data from the Energy Information Administration due to be released on Wednesday morning. Analysts surveyed by The Wall Street Journal expect the official data to show a fall of 800,000 barrels in crude inventories.
The news regarding oil prices and supply data can have a significant impact on the forex market. Oil is a crucial commodity in international trade, and fluctuations in its price can affect the value of currencies. Traders and investors in the forex market closely monitor oil prices as part of their fundamental analysis. Changes in oil prices can influence the economic outlook of oil-exporting countries and affect currency exchange rates. Therefore, developments in the oil market, such as demand concerns and supply data, are closely watched by forex traders to assess potential currency movements and trading opportunities.