Oil Prices

Oil Dips Ahead of US Inflation Data, EIA Report for 2023

On Tuesday, oil prices fell after the EIA reported US output set a global all-time high last year, and the market awaits upcoming inflation data.

The US West Texas Intermediate (WTI) petroleum futures for April delivery shed 0.47% to $77.56 per barrel on March 12. Nevertheless, industry watchers predict a 0.53% recovery to $77.97 a barrel in the coming trading day.

Traders exercised caution while waiting for signs of slowing inflation, which may prompt the Federal Reserve to cut rates. Lower interest rates encourage spending and stimulate economic growth, leading to higher crude oil demand.

America’s headline Consumer Price Index (CPI) rose 3.20% year-over-year (YoY) in February, topping the 3.10% market consensus. It accelerated from the 3.10% lift in January and marked the third consecutive month annualized inflation exceeded estimates.

Meanwhile, the core CPI stood at 3.80% YoY in the second month, decelerating from 3.90% in the previous month. However, analysts expected the increase in annualized core consumer prices to slow to 3.70%.

In addition, the American Petroleum Institute reported a draw of 5.52 million oil barrels in the week ending March 08. It followed an accumulation of 0.42 million barrels a week prior and reversed forecasts of a 0.40-million-barrel build.

EIA Says 2023 US Oil Output Set a New World Record

The Energy Information Administration (EIA) revealed that US oil production averaged 12.90 million barrels per day (bpd) in 2023. The agency added that the new global record is unlikely to be surpassed by any other country within the decade.

Commodity experts recognized the US as the new swing petroleum producer, accounting for 15.79% of the global supply. Russia ranked second with 12.36%, followed by Saudi Arabia’s 11.87% and Canada’s 5.63%.

Lastly, the EIA reiterated that the US has been the top crude oil producer for six straight years. Nonetheless, its position may be threatened once OPEC+ ends the voluntary output cuts implemented last year to support petroleum prices.

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