Oil extended losses that began after Monday’s close with the announcement that the US was selling more crude from its strategic reserves, with a higher-than-expected inflation figure adding pressure.
The Strategic Petroleum Reserve will fall to its lowest level in over 40 years as a result of the administration’s decision to move forward with a congressionally mandated sale of 26 million barrels of crude. West Texas Intermediate settled near $79 a barrel, slipping on the day but clawing back from over a 3% drop early in the session after data showed consumer prices rose the most in three months.
Oil has had a mixed start to 2023 as traders attempt to price the impact of China’s re-opening, supply curbs announced by Moscow and persistent concerns of a recession in the US. Crude stockpiles continue to grow, contributing another headwind for potential bulls. US inventories are projected to rise for the seventh straight week in the Energy Information Administration’s weekly report tomorrow.
Still, oil traders are returning in droves to the commodity after last year’s volatility-driven exodus, with inflows rising to the highest seasonal levels in at least 15 years.