Harvest Global Markets :

On Thursday, intermediate crude oil rebounded after a previous drop. The oil industry’s growth in China, the largest oil consumer globally, continues to be hampered by concerns about a sluggish economic recovery. Yesterday, the U.S. benchmark declined by 1.5% after the Federal Reserve hinted at potential rate hikes later this year. Investors are worried about an economic slowdown caused by interest rate increases and a drop in oil consumption.

The oil industry’s prospects appear bleak due to China’s economic data, which was released on Thursday. Industrial output in May grew by a modest 3.5%, down from April’s 5.6% increase and below the experts’ predicted 3.6% rise, owing to weak domestic and international demand. Retail sales, a key indicator of consumer confidence, increased by 12.7%, slowing from April’s 18.4% growth and falling short of the expected 13.6% growth. Poor Chinese statistics exacerbated the downward pressure on oil prices.

Furthermore, the Energy Information Administration reports that U.S. crude oil stocks unexpectedly increased by almost 8 million barrels in the week ending June 9, up from analysts’ anticipated loss of 500,000 barrels. In addition, diesel and gasoline stocks exceeded expectations. These high inventories indicate a weak demand for oil in the United States.

The slow start to the U.S. driving season and the ongoing increase in visible global oil stocks are also dampening market optimism. The European Central Bank is set to raise borrowing costs to their highest level in 22 years, raising concerns and opening the door for potential future increases. The Bank of England is expected to continue increasing interest rates in its fight against inflation, according to analysts.

Despite recovering slightly after a recent loss, U.S. West Texas Intermediate crude oil futures remain under pressure due to the Federal Reserve’s indications of prospective rate hikes and ongoing concerns about China’s delayed economic recovery. The market’s cautious mood is further exacerbated by disappointing Chinese economic statistics and surprise rises in U.S. crude oil stocks. The oil industry faces unpredictable global demand patterns, and the possibility of stricter monetary policies from central banks is causing concern.