Oil Prices Edge Higher Alongside Equities

Oil Prices Edge Higher Alongside Equities

Oil prices saw a modest increase, driven by optimism in equity markets and upcoming data on US crude inventories. West Texas Intermediate (WTI) crude hovered near $82 a barrel after a period of low-volume trading due to the Juneteenth holiday in the US. This rebound marks a recovery from recent lows, supported by a rally in equity markets and a shift by algorithmic traders from short to long positions.

US Crude Inventory Report Anticipated

The market eagerly awaits the US Energy Information Administration’s supply report, set for release later on Thursday. The holiday delayed this report by a day, and it could significantly influence market momentum. An industry report earlier this week suggested increasing stockpiles, adding to market intrigue. Additionally, the expiration of WTI’s July contract on Thursday should contribute to price volatility.

The delayed EIA report and WTI contract expiration fuel market volatility, with potential supply impacts anticipated, according to WSJ Subscription Offers.

Crude Mirrors Broader Market Trends

Recently, oil prices have closely mirrored movements in other asset classes, including equities. This trend is also reflected in the futures curve, indicating a stronger near-term market. The recent rise in crude prices has led to a drop in implied volatility for Brent crude, reaching its lowest level in six years.

Inflation Downward Trend Continues, Fed Seeks More Evidence

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OPEC+ Supply Cuts and Demand Outlook

Oil is on track for a monthly gain, thanks to the decision by OPEC+ to extend supply cuts. This decision highlights that any potential increase in supply will be contingent on market conditions. Traders are also closely monitoring the demand outlook, with refineries in Asia gradually resuming operations post-maintenance, despite weak profit margins.

Market Reactions and Expert Insights

“Today we are awaiting the inventory data,” said Arne Lohmann Rasmussen, head of research at A/S Global Risk Management. “After the API data, the market expects a build, so there could be room for a positive surprise.” The upcoming EIA report and market reactions will be crucial in setting the tone for the oil market in the coming days.

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