📉 Surprising Turn in Oil Prices: What Will the Fed and CPI Data Reveal? 📊
On Tuesday, oil prices edged down as cautious investors awaited crucial U.S. inflation data and the Federal Reserve's policy meeting outcomes. Brent crude futures dropped 11 cents to $81.52 per barrel, while U.S. West Texas Intermediate crude futures slipped 3 cents to $77.71.
📈 The previous day, prices had surged about 3% to a one-week high, driven by expectations that the summer vacation season in the Northern Hemisphere would boost fuel demand. However, analysts warned that this rise might be short-lived due to the potential for higher interest rates.
🗓️ Wednesday is set to be a pivotal day with the release of the U.S. consumer price index (CPI) data for May and the conclusion of the Fed's two-day policy meeting. These events are expected to provide more clarity on inflation trends and their impact on fuel demand. IG market strategist Yeap Jun Rong noted that for a sustained recovery, oil prices might need to move above the $83.00 level, as the broader trend for oil prices remains downward.
🇨🇳 Adding to the pressure, Saudi crude exports to China have declined for the third consecutive month. On the flip side, higher refinery margins and the possibility that the U.S. might increase crude purchases for its petroleum reserve are offering some support to oil prices. Singapore refinery profit margins have improved, averaging around $4 a barrel recently, up from May’s average of $2.56.
💼 Hiroyuki Kikukawa, president of NS Trading, highlighted that if WTI stays below $79, the U.S. could expedite replenishing its Strategic Petroleum Reserve, a move that Energy Secretary Jennifer Granholm indicated could happen by the year's end as maintenance on the stockpile wraps up. The U.S. aims to buy back oil at approximately $79 a barrel.
🔍Keep an eye on the latest updates as these key economic indicators unfold.
