Crude Oil Prices Edge Higher in the United States after Decline in EIA Crude Inventorie
Crude oil prices see a silver lining amidst constantly down swinging costs, which didn't expect the rise due to heavy crude oil production. However, as the anomalies of supply chains persist, the prices might rise due to an increase in demand. The surge seems to stem from an alleviation in EIA crude inventories.
Declining Dynamics that Caused Bearish Trend in Crude Oil Prices
The bearish dynamics affecting oil production have been many, including China's 'Zero-Covid policy'. The policy considers prevention as much as possible, thereby restricting the demand, which would have been expected if not exceedingly higher. Since China's demand for energy and crude oil saw a steep decline, so was the case with falling prices and bearish trends among crude oil. In addition, Joe Biden's announcement of adding nearly 15 million barrels of crude to check the rising cost of gasoline and crude oil accounted for the prognosticated price decline. If that was not enough, more oil releases could be ordered from the Strategic Petroleum Reserve.
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China alone accounted for a significant dent in the demand, as is evident from the reports. The August production of China was just a faint 0.9% above the July production and almost a whopping 8% below compared to the last year's August production. Air travel too saw a halt of about 42%, while road travel was down by 30% compared to the previous year.
Libya's sudden rise in the export of oils, stationary storage tankers, and OPEC crude oil yield added to the bearish dynamics leading to halting demand for crude oil. On the stationary storage front, a report by Vortex suggested a rise in the amount of oil by almost 4.5%.
India's Help to Add to the Bullish Factors.
India has seen a consumption in oil prices and hence was one of the flagbearers of the rise in demand, which added to the relief of bullish dynamics. Compared to last year, India recorded consumption of above 8.1% to approximately 17.2 MMT.
The Energy Information Administration reported a slump in their inventories, from the expected 2.2 million barrels to 1.73 million barrels, which was obviously a bullish trend.
Baker Hughes's Grappling with Uncertainties
The price of Baker Hughes saw a considerable improvement of almost 17% in the quarter compared to the same time the last year. Moreover, it was a vast improvement since the economic rundown after the COVID-19 pandemic jolted the economy.
Factors such as supply chain shortcomings, lack of equipment meant for hydraulic fracturing, etc., ceased production. Therefore, the elevation ins prices is visible. Although the supply chain impediments might see a rise in production, prices might not necessarily come down as Joe Biden has overhauled the USA's storage and refineries. Hence, more shows would essentially go towards the atonement of the crude oil instead of a hike in the price. The market seems volatilevolatile, and the stability seems far-reaching as yetyet.
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ConclusivelyAs per Procurement Resource, the uncertainty in the price trends could be primarily credited to the slump and plump of production, which keeps changing as per various policies, ongoing inflation, economic recession, COVID-19, and whatnotamong other reasons.