Oil prices are exhibiting a minimal movement this week as traders remain cautious over global oil demand following an unforeseen rise in U.S. crude stockpiles, coinciding with disappointing economic data from both the United States and China which has softened price momentum.
Crude prices continue to be under pressure as energy traders can’t seem to shake off their concerns about global demand. Despite the optimism surrounding China’s performance in the latter half of the year, the current circumstances are too disappointing to ignore.
Unexpectedly, crude oil stockpiles in the United States saw a surge of 3.69 million barrels this week, as revealed by data from the American Petroleum Institute (API) on Tuesday. Analysts had predicted a decrease of 1.3 million barrels, making this development even more surprising. The total amount of crude oil accumulated this year has now reached approximately 42 million barrels.
Concerns about U.S. economic growth intensified as crude inventories increased, and retail sales in April fell short of expectations. The ongoing discussions on raising the U.S. debt ceiling further weighed on the market, with the Treasury Department warning of a potential default by June 1 if Congress fails to act.
China experienced a slowdown in its economy during the early part of the second quarter. Disappointing figures for April’s industrial output and retail sales contributed to this sentiment. Additionally, stalled debt ceiling talks and underwhelming retail earnings further dampened market sentiment. As a result, concerns about a global recession intensified.
In the UK There has indeed been some mildly encouraging news following the latest GDP estimates published by the Office for National Statistics (ONS). GDP is expected to have grown by 0.1 per cent in the first quarter of 2023. While the United Kingdom is on track to avoid a ‘technical recession’ in 2023, the anaemic growth and ongoing ‘cost-of-living’ crisis, together with the possibility of rising unemployment, will lead many households to feel like they are ‘experiencing’ a recession, this comes following a week when both Vodafone and BT have announced significant job cuts.
The mixed economic outlook will no doubt continue to weigh on oil prices as we move through the rest of the month. Fuel card users can expect a small increase next week in the region of .50 pence per litre depending on their card type.
