Oil markets declined yesterday despite American Petroleum Institute's report that US crude oil inventories dropped by 1 million barrels, which was against market expectations. Similarly, gasoline inventories fell by 926,000 barrels, though less than expectations of 3 million barrels.
West Texas Intermediate crude oil futures dropped for the third consecutive session, falling by 0.90% and closing at the $64.80 level. Brent oil futures also fell for the third consecutive session, dropping by 0.71% and closing at the $68.39 level.
Oil markets continued losing ground this morning in light of the Federal Reserve's upcoming announcement of its projections for the US economy and the publication of a monthly report by the International Energy Agency, which recently claimed that there are no signs of an upcoming oil supply fall.
"There is more than enough oil to keep the market adequately supplied," claimed the International Energy Agency, adding that oil inventories still look ample compared to historical levels.
The IEA expects oil demand to return to pre-COVID levels by 2023, while it expects oil demand to remain unchanged this year.
By 9:14 GMT, West Texas Intermediate crude oil futures fell by 0.23% to the $64.66 level, followed by Brent oil futures, which dropped by 0.39% to the $68.15 level.
Despite IEA projections, It's highly likely that crude oil prices will rise in the future, especially taking into account the current US administration's agenda to reduce oil and gas production and replace it with renewable energy. This is because the demand for fossil fuels is expected to remain unchanged which, when added to a dwindling supply, could make fossil fuels more scarce and push up their prices.
According to an analyst consulted by Fox News, Biden's plan is having a positive impact on oil prices, though having a negative impact on the economy. The analyst referenced the Biden administration's decision to suspend the issuance of oil and gas permits and the cancelation of a 1,700-mile oil pipeline project, which is part of Biden's "Build Back Better” recovery plan.
Another factor that would push oil prices upwards is insistence by OPEC+ on keeping oil supply restrained, especially after it decided to extend its supply cuts until April, against the expectations of the market.