Oil prices rise as U.S. crude inventories drop
Oil prices climb as US crude inventories fall
US crude oil futures rose above $70 per barrel on Wednesday after the American Petroleum Institute (API) reported a 4.7 million-barrel drop in US crude inventories, surpassing expectations of a 1.9 million-barrel decline. This marked the fourth consecutive weekly draw.
Meanwhile, the Department of Energy (DoE) recorded a modest 0.5 million-barrel increase in the Strategic Petroleum Reserve (SPR), raising its total to 393 million barrels.
USOIL chart (Oct 2024 - Dec 2024) Source: Trading View
OPEC+ keeps close watch on U.S. oil production growth
OPEC+ continues to monitor potential supply challenges as rising US oil production threatens to weaken the group's market influence. The US has increased output by 11% since 2022, reaching 21.6 million barrels per day (bpd). OPEC+ now controls 48% of global oil production, down from 55% in 2016. Concerns are heightened by Donald Trump’s proposed deregulation policies, which could boost US oil output further, challenging OPEC+ efforts to stabilize prices through extended supply cuts until 2026.
Oil markets face mixed sentiment due to weak Chinese consumer spending data, raising demand concerns. Simultaneously, traders are closely watching the Federal Reserve’s expected 25-basis-point rate cut, which could support economic growth and oil demand. However, increased production from non-OPEC+ countries continues to exert downward pressure on prices.
Previously, we discussed oil prices stabilizing near $70 per barrel due to geopolitical tensions and cautious trading ahead of the Fed’s rate decision.
