Crude oil trading reminder: EIA crude oil inventories fell much more than expected, and oil prices remained at more than two-month highs

Forex PlatformInternational oil prices held near more than two-month highs in early Asian trading on Thursday. Oil prices rose about 1 per cent on Wednesday after reports showed US crude inventories fell more than expected, but fears of rising global inventories limited gains in light trading ahead of the US Independence Day holiday.

Brent crude futures rose $1.10, or 1.3 percent, to settle at $87.34 a barrel on Wednesday, while U.S. crude futures rose $1.07, or 1.3 percent, to $83.88 on Wednesday.

The U.S. Energy Information Administration (EIA) said Wednesday that U.S. crude inventories plunged 12.2 million barrels to 448.50 million in the week ending June 28, compared with analysts' expectations for a drop of 680,000 barrels.

Matt Smith, oil analyst at Kpler, said: "Strong exports, slightly lower imports and a pick-up in refinery volumes have all contributed to a reduction in crude inventories."

But the market reaction was muted, with analysts pointing to a decrease in trading volume ahead of the Independence Day holiday.

A survey released on Tuesday showed that OPEC's oil production rose for the second consecutive month in June, due to higher supplies from Nigeria and Iran, outweighing the impact of voluntary supply cuts by other members and the wider OPEC + alliance.

"Despite OPEC + members' commitment to keep production below quota in the third quarter, production reportedly increased in June, and lingering concerns about a weak economic recovery in the Asian powerhouse sent a negative signal," said Kelty at Panmure Gordon.

Activity in the services sector in big Asia grew at its slowest pace in eight months and confidence in June hit a four-year low, according to a survey. China is the world's largest crude oil importer, and the slowdown in economic activity in China will affect oil demand.

However, the US employment data and ISM services PMI data were poor, and the Federal Reserve meeting notes were dovish, raising interest rates. The Federal Reserve's September interest rate cut is expected to provide support for oil prices. Because if the Federal Reserve cuts interest rates, it will help crude oil demand growth.

The Labor Department said Wednesday that initial jobless claims rose by 4,000 in the week ending June 29, to a seasonally adjusted 238,000.

Separately, the ADP employment report released on Wednesday showed that private jobs rose by 150,000 in June, compared with 157,000 in May. Economists interviewed by Reuters had predicted that private jobs would increase by 160,000.

The jobless claims report showed that the number of people continuing to receive unemployment benefits rose by 26,000 in the week to June 22, reaching a seasonally adjusted 1.858 million, the highest level since the end of November 2021.

The ISM's services purchasing managers' index slipped to a four-year low in June, a possible signal that the economy was losing steam at the end of the second quarter, as the widening trade deficit further undermined forecasts of accelerated growth last quarter.

The data revealed that the U.S. services purchasing managers' index (PMI) fell to 48.8 from 53.8 in May, a four-year low.

Federal Reserve Chairperson Jerome Powell said on Tuesday that the United States is back on a "downward inflation trajectory", but policymakers need more data to verify whether the recent decline in inflation accurately reflects economic conditions before cutting interest rates.

The dollar fell 0.33 percent on Wednesday to close at 105.34, after hitting an intraday low of 105.04, its lowest since June 13, after a series of weaker-than-expected U.S. economic data boosted expectations that the Federal Reserve could start cutting interest rates later this year.

Fed officials acknowledged at their last meeting that the US economy appeared to be slowing and that "price pressures are easing", but still recommended a wait-and-see approach before committing to a rate cut, according to minutes from a two-day monetary policy meeting on June 11-12.

The Federal Reserve will hold its next policy meeting on July 30-31 and is expected to maintain its benchmark interest rate unchanged.

At that time, policymakers will receive an update on the labor market, with the June employment report to be released this Friday, the June CPI to be released on July 11, and the preliminary estimate of second-quarter economic growth to be released on July 25.

According to the Federal Reserve, the market expects the probability of the Federal Reserve cutting interest rates in September to rise to 74%, compared to about 68% the day before.

The geopolitical situation also continued to provide support for oil prices. On July 3 local time, Hezbollah issued a statement saying that in response to the Israeli army's attack on southern Lebanese cities, its fighters fired 100 "Katyusha" rockets at the headquarters of the 210 Division of the Israeli Army in the Golan Heights and the Israeli air defense and missile base.

On the same day, the Israel Defense Forces issued a statement saying that after a Lebanese Hezbollah commander was killed in an Israeli airstrike, about 100 rockets were fired from southern Lebanon towards the northern Galilee region of Israel and the Israeli-occupied Golan Heights. Most of the rockets landed in open areas, and no casualties were reported.

Israeli Prime Minister Benjamin Netanyahu's office said that the intelligence agency Mossad-led negotiating team has received Hamas' latest cease-fire offer from Qatar, Egypt and American mediators. Israel is studying the offer and will respond to the mediators. The above is the latest news about crude oil. If you are interested, you can continue to follow it.Forex Platform。