Oil Prices Fall on Profit-Taking

Overview

Oil prices fell at the close yesterday, Wednesday, on a wave of profit-taking after a previous rise due to the lack of crude oil in the US and China’s promise to support its economic growth.

Price Movement

Brent oil futures fell 17 cents to $79.46 a barrel, while West Texas Intermediate oil futures fell 40 cents to $75.35 a barrel.

Oil prices slipped late in the session after two contracts rose more than $1 a barrel, according to Reuters.

Factors Affecting Prices

And Phil Flynn, an analyst at Price Futures Group, said that market participants took advantage of high prices and made a profit.

A rise in the dollar index has also weighed on prices, and a rise in the US currency is making crude oil more expensive for investors holding other currencies.

Yesterday, Wednesday, data from the Energy Information Administration showed that U.S. crude inventories fell 708,000 barrels last week to 457.4 million barrels, limiting losses from analysts polled by Reuters to 2.4 million barrels lower.

The data showed that strategic oil inventories increased for the first time since January 2021, as the United States tries to replenish stocks after a record decline last year.

Last Tuesday, China’s National Development and Reform Planning Commission pledged to develop a policy to “recover and expand” consumption in the world’s second-largest economy, which could boost demand for oil.

A report released Tuesday this week in the US showed retail sales rose less-than-expected in June, fueling expectations that the Federal Reserve will stop raising interest rates.

On another positive note, ECB Governing Board member Claes Nott said on Tuesday that a rate hike after next week’s meeting is “by no means necessary.”

At the same time, the Russian Ministry of Energy said that Russia is expected to cut oil exports by 2.1 million metric tons in the third quarter of the year, in line with a planned voluntary export cut of 500,000 bpd in August.