This week, the benchmark crude oil WTI (CM:CL) rose by nearly 1% to around $83.92 as traders digested a barrage of somewhat conflicting macro data. This could leave oil prices rangebound in the short-term.
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Supplies Tighten but Economy Weakens
NData from the American Petroleum Institute (API) indicated a decline in crude stockpiles, with U.S. commercial stockpiles decreasing by 3.23 million barrels for the week ended April 19. Subsequent data from the Energy Information Administration (EIA) showed a decrease of 6.4 million barrels in crude inventories, compared to an anticipated increase of 1.6 million barrels for the same week.
While these tightening supplies could have been a boost for oil prices, the latest weaker-than-expected GDP print of 1.6% has raised concerns whether the U.S. economy could continue on its growth path amid elevated interest rates. Oil prices have largely increased this year due to supply cuts from OPEC+ and geopolitical tensions in the Middle East. However, the tensions between Israel and Iran are showing signs of easing, which lowers the risk of any supply shocks.
Nevertheless, concerns over weak economic growth may ease, at least temporarily, as U.S. Treasury Secretary Janet Yellen noted that the GDP numbers could see an upward revision. However, inflation woes will continue to weigh on traders’ minds as higher inflation weakens the case for any rate cuts over the coming months. Yesterday, the personal consumption expenditures price index came in at a hotter-than-expected 3.4%.
What Is the Oil Price Forecast?
Consequently, the upcoming inflation numbers today could decide the next trajectory for oil prices. At the same time, the combination of tightening supplies and a weak economic outlook could keep oil prices rangebound in the short term. The TipRanks Technical Analysis tool too is flashing mixed signals for oil today.
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