Oil Prices Rise Again As Traders Favour Bullish Signs Over Bearish Reports

Meanwhile, the IEA downgrades demand due to China's lockdowns: File Image/Pixabay

With increasingly conflicting opinions about the state of the global oil market and demand dominating media headlines, crude traders on Wednesday caused prices to rise again based on the contention of a worldwide supply deficit, despite bearish signals.

West Texas Intermediate settled up $3.65 to $104.25 per barrel and Brent settled up $4.14 to $108.78 per barrel after Toril Bosoni, head of the oil market division of the International Energy Agency, told media that "The market does look more balanced, but we have to remember that oil demand continues to grow this year.

"With all the uncertainty on both the demand and the supply side, the SPR releases go some way to create comfort for the market."

Bosoni said this as U.S. stockpiles rose a massive 9.38 million barrels, though much of that increase was due to moving inventories from the Strategic Petroleum Reserve to the commercial inventories; gasoline and distillates both experienced declines.

Meanwhile, the IEA said the Organization of the Petroleum Exporting Countries (OPEC) provided only 10 percent of its promised supply increases for March; however, the Agency at the same time cut its forecast for global crude needs because of China's renewed Covid lockdowns (which reportedly reduced consumption by 925,000 barrels per day in April).

Also on Wednesday was more doubt cast on the efficacy of the sanctions against Russia (apart from contributing to market turmoil): president Vladimir Putin said during a meeting with government and company officials that with regards to his country's oil, gas and coal, "We will be able to raise their domestic consumption, stimulate higher complexity of feedstock processing and raise energy supplies to other parts of the world - somewhere, where they are really needed."

Still, the IEA sees the country's output down by 1.5 million bpd for April as a whole.

As for the volatility that has characterized oil trading for most of 2022, it won't end any time soon as far as John Kemp, founding partner at Again Capital, is concerned: he noted that an economic slowdown in Europe and North America is contributing to the latest trends in oil prices, plus the heightened uncertainty and volatility in markets makes hedge funds adopt a cautious approach to buying.