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WTI crude oil futures are trading close to $79 a barrel, falling -9.1% from $86.9 a barrel on April 5th. Oil is edging lower, to the lowest level in seven weeks, due to a surprise buildup in crude inventories in the US and easing geopolitical tensions in the Middle East. US crude inventories for the week ending April 26th rose by 7.256 million barrels to 460.9 million barrels, compared to a 6.368 million barrel draw in the previous week. The market consensus estimated that stocks would decrease by 2.3 million barrels, according to the US Energy Information Administration (EIA) on Wednesday. This figure was the highest since June 2023, adding to concerns about weakening oil demand.
Breaking down the numbers, we see that total commercial oil demand, calculated as production plus imports minus exports, taking into consideration the corresponding weekly draw or buildup for the first four months, grew by 112 million barrels, or +6.7%, compared to 2023 (Figure 1). Nevertheless, the same comparison with 2022 data reveals that demand increased slowly by only 15 million barrels, or +0.9%, despite the fact that inflation has been lower this year. Meanwhile, the Fed is expected to keep its benchmark federal funds rate steady at around 5.3%, its highest level in more than two decades amid stubbornly high inflation.
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