Oil prices fluctuated in early trade on Wednesday over an expected rise in US crude oil inventories in the world’s largest oil-consuming country and supply uncertainties ahead of a much-expected meeting of the OPEC+ group.
International benchmark Brent crude was trading at $100.52 per barrel at 09.29 a.m. local time (0629 GMT) for a 0.02% decrease after the previous session closed at $100.54 a barrel.
American benchmark West Texas Intermediate (WTI) was at $94.39 per barrel at the same time for a 0.03% drop after the previous session closed at $94.42 a barrel.
The American Petroleum Institute (API) announced its estimate of a rise of over 2.2 million barrels in US crude oil inventories late Tuesday, relative to the market expectation of a 467,000-barrel fall.
The predicted increase in stockpiles signals a drop in crude demand in the US, the world's top oil consumer, putting downward pressure on prices.
The uncertainties around the OPEC+ production scheme for September are set to continue to arouse market volatility ahead of the cartel's meeting later on Wednesday.
'The group has gone quiet because they seem to be caught between their inability to increase output anywhere close to quotas and being the central bank of oil,' said Christof Ruhl, a senior research scholar at the Center on Global Energy Policy of Columbia University in New York City, in his daily energy markets review for Gulf Intelligence Consultancy firm.
Ruhl stressed that a key question for the group is how to keep Russia in the fold “because a group like OPEC+ is more effective the more members it has.”
'I think that both Russia and the core OPEC members have a huge incentive to stick together and to devise a new scheme for navigating these choppy waters. They may step back a little bit from making big announcements on managing the market for now, but they will become significant again the next time oil prices are significantly down,' Ruhl added.
Amid numerous uncertainties, Ruhl expects oil prices to remain somewhere around $100 a barrel in the third quarter of the year.
“An expected recession and slowdown in economic growth, plus the lockdown in China, have played a role in bringing oil prices down and there have also been safety valves such as the SPR release and the possibility of Iran and Nigeria producing more. So, I am quite bearish and expect excess supply to dominate over demand,” he said, adding that the biggest unknown for the second half of the year is the impact of continued sanctions on Russian oil production capacity.
Upward movements in crude oil prices, which are indexed to the US dollar, have been suppressed by the rising value of the greenback.
The US dollar index, which measures the value of the American dollar against a basket of currencies, including the Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc, rose 0.03% to 106.28.
By Sibel Morrow