After trading within a narrow range, the price of oil dipped as traders balanced the growing crude stocks in the United States against the anticipation that OPEC and its allies will continue production restrictions.
The broader risk-off mentality was the driving force behind the West Texas Intermediate decline, which resulted in the price of a barrel settling near $78.
According to the Energy Information Administration, crude oil stocks in the United States increased by 4.2 million barrels over the last week. This is a lesser increase than the 8.4 million barrel gain that was anticipated in a report from the industry.
As a result of the increase in stockpiles, the narrative of better physical markets, which had been the primary driver of crude's advances in previous sessions, is slightly dampened
A bullish, backwardated trend has been observed in the widening of timespreads, with shorter-term barrels being valued higher than those with longer-term maturities. There has also been an increase in the strength of so-called physical market swaps and the WTI cash roll.
Oil prices are still reasonably close to one another, despite the fact that they are moving in the direction of a tiny monthly increase
It is widely anticipated that the Organization of the Petroleum Exporting Countries (OPEC) and its allies will agree to extend the reductions into the second quarter, which has been a significant factor in the advancement. Tensions in the Middle East have also contributed to the recent increase in prices.
However, questions over the demand forecast continue to exist. According to a research that was issued on Wednesday, China National Petroleum Corporation estimated that the growth of crude consumption in China will only increase by 1% this year. This is due to the fact that a post-pandemic rebound is beginning to fade and the adoption of new energy vehicles is reducing demand.
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