Oil prices slumped this past week as traders looked to make sell-offs amid changes in Chinese oil growth and shrinking U.S. stockpiles. The price of benchmark West Texas Intermediate fell to $77 per barrel, the largest weekly decline since the first week of May. Futures have been locked in a $4 trading band over the past week.
US inventories dropped for a fourth straight week, falling to its lowest level since February. This appears to be a major factor in dissuading buyers in the eyes of industry analysts. “We need a positive catalyst and right now inventory draws are expected and not providing enough of a reason to buy this dip,” Rebecca Babin, senior energy trader at CIBC Private Wealth observed.
Despite the recent decline in demand and prices, crude oil prices have still been moderately higher for the year. This was largely helped by a cut in production by the OPEC+ alliance as well as growing market expectations of an incoming Federal Reserve interest rate decline, particularly with employment figures stabilizing and inflation cooling toward the US central bank’s 2% target. Still, crude prices may be further influenced by OPEC+’s next move, with market watchers split over whether the cartel will decide to lift their output restrictions over the course of the next quarter.