Oil Holds Advance as Risk-On Mood Eclipses US Stockpile Build
What was the reported increase in US crude inventories last week according to the American Petroleum Institute?
The American Petroleum Institute reported a 2.26 million barrel increase in U.S. crude inventories last week. This marks the third consecutive weekly increase in stockpiles, which has contributed to the ongoing fluctuations in oil prices. The rise in inventories comes amid a recovery in oil prices driven by a risk-on mood in wider markets and stronger near-term demand expectations.
How did the performance of the S&P 500 influence the recovery in oil prices?
The sustained risk-on mood in wider markets, including the S&P 500 reaching another record high, has contributed to the recovery in oil prices. This powerful recovery has also been propelled by trend-following technical traders. The S&P 500 has a 6.8% exposure to the energy sector, which may have influenced the correlation between the index and crude oil prices.
What factors contributed to oil prices holding steady despite the increase in US crude stockpiles?
Several factors contributed to oil prices holding steady despite the increase in US crude stockpiles. The sustained risk-on mood in wider markets played a significant role, as the S&P 500 rose to another record, extending a powerful recovery in oil prices. Additionally, the American Petroleum Institute reported a rise in US crude inventories, which was offset by a stronger near-term demand indicated by key timespreads. Refiners in Asia restoring some capacity after maintenance also boosted crude consumption. These factors collectively supported oil prices, with Brent crude trading above $85 a barrel and West Texas Intermediate near $81.