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Crude oil futures reversed course to close higher on Wednesday, as US government data showed a slight decline in inflation and a larger-than-expected decline in crude oil inventories.
The Consumer Price Index rose 0.3% last month after rising 0.4% in March and February, while the 0.3% increase in core inflation, which excludes food and energy, was the smallest increase in four months.
In response, the dollar fell 0.6% against a basket of other major currencies and yields on benchmark 10-year US Treasury bonds fell to their lowest levels in more than a month.
Lower interest rates would reduce borrowing costs for businesses and consumers, which could lead to economic growth and demand for oil.
Meanwhile, US commercial crude oil inventories fell last week by 2.5 million barrels, the EIA said, well above consensus expectations for a decline of 400,000 barrels.
“The withdrawal of crude oil comes mostly from the increase in refinery operating rates, (such as) Refineries are finally getting serious“I finally stepped it up a little,” Mizuho's Bob Yawger told Reuters.
Nymex crude (CL1:COM) for June delivery was flat +0.8% to $78.63 per barrel, and July Brent crude (CO1:COM) closed the earliest. +0.4% to $82.75 per barrel; Brent's premium over WTI fell to its lowest levels since March 28.
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Crude oil futures fell in early trading after the release of the International Energy Agency data It lowered its forecast for oil demand growth this yearThe report pointed to slow industrial activity and mild winter weather, which led to a decline in fuel consumption in some of the world's largest economies, especially in Europe.
The IEA said in its report that oil demand growth for 2024 is now expected to reach 1.1 million barrels per day from the previous forecast of 1.2 million barrels per day. Latest monthly reportWith oil demand in OECD countries shrinking by 70,000 barrels per day on an annual basis.
“The OECD recession contrasts with relatively resilient non-OECD demand of 1.2 million bpd year-on-year in the first quarter and 2024 on average, making global growth more dependent on emerging economies,” the IEA said.