Tuesday’s Asian trading saw an increase in oil prices as gains from the previous session were extend after the U.S. government announced intentions to start replenishing its dangerously depleted Strategic Petroleum Reserve (SPR). This news gave markets the green light to rise.
In a statement released on Monday, the Department of Energy confirmed rumours that it would buy up to 3 million barrel of oil for the SPR. This announcement came after multiple media stories last week.
The move was make after the Biden administration reduced the SPR over the previous year to its lowest levels since 1983 in an effort to lower historically high fuel costs brought on by the confliction in Russia & Ukraine.
Although the drawdowns had achieved their goal of significantly lowering petrol prices in the United States. They had also angered oil bulls and Biden’s political rivals.
The DOE also claimed to have obtained the cancellation of 140 million barrel of SPR sales over the following four years that were require by Congress.
The action significantly reduced oil prices. Which had been negatively impact during the previous four weeks by worries about sluggish economic development.
By 1500 IST, West Texas Intermediate crude prices increased 0.6% to $ 71.27 barrel. While Brent oil futures increased 0.6% to $75.55 a barrel. On Monday, both contracts saw gains of around 2%.
The likelihood of tighter supplies helped to support oil prices. And news of Canadian wildfires hinted at possible disruptions in oil exports from North America. This is a result of rising gasoline demand brought on by the summer in the United States.
However, the conditions that caused a four-week losing streak in oil prices were still in force. Data released on Tuesday indicated that Chinese industrial manufacture & retail sales increased at a slower rate than anticipated in April, suggesting a sluggish economic rebound in the world’s top oil user. As a result, markets remained tense.
Additionally, larger daily advances in oil prices were constrain by the weak reading.
The focus is now on important United States retail sales & industrial production data that will be released later today.
The top economies and oil users in the world are cooling, according to recent economic assessments. This could potentially slow down demand for oil later this year.
This week, concerns about tighter monetary conditions in the United States increased as many region Federal Reserve president expressed concern that the bank will likely take additional action to prevent sticky inflation.
This week, attention will be drawn to many additional Fed speakers, including Friday’s keynote address by Chair Jerome Powell.