Crude oil prices fell sharply on Wednesday due to mounting concerns surrounding a potential economic downturn in the United States and renewed worries regarding the banking industry. These apprehensions outweighed the positive impact of falling U.S. crude inventories and the potential for tighter global supplies.
The latest EIA report showed U.S. crude inventories dropped 5.054 million barrels last week, far exceeding expectations of a 1.486-million-barrel decline.
As per recent media reports, U.S. consumer confidence dropped to a nine-month low in April, raising concerns that the world's largest economy may face a recession later in the year.
Furthermore, market experts are predicting an additional 25 basis point rate hike from the U.S. Federal Reserve in the upcoming meeting, which is scheduled for May 2–3.
On Wednesday, Brent crude futures experienced a decline of 3.81%, reaching $77.69 per barrel, while WTI crude futures fell 3.59% to $74.33 per barrel. This marks the second straight loss for both Brent and WTI, which fell 2.37% and 2.15%, respectively, during Tuesday's trading session, resulting in a cumulative loss of nearly 6% each. As a result, the oil benchmark indices hit a four-week low.
Brent crude and WTI crude have retraced all the gains they made earlier this month, which came after an unexpected cut of over one million barrels per day announced by OPEC+, a group of major oil-producing nations led by Saudi Arabia.
It is worth noting that in October 2022, OPEC+ members had agreed to a cut of 2 million barrels per day, marking the largest reduction in oil production since the onset of the COVID-19 pandemic.
Meanwhile, OPEC's share of India's oil imports declined sharply in the fiscal year ending March 2023, reaching the lowest level in at least 22 years, Reuters reported.
Members of OPEC saw their share of India's oil market slide to 59% in the fiscal year to March 2023, from about 72% in 2021/22, a Reuters analysis of the data that dates back to 2001-02 showed.
The report shows that Russia overtook Iraq for the first time as India's top oil supplier and also pushed Saudi Arabia to the number three spot. India has been a big buyer of Russian oil since the invasion of Ukraine.
Data cited by Reuters from trade sources showed that India shipped in about 1.6 million barrels per day (bpd) of Russian oil in 2022–23, about 23% of its overall 4.65 million bpd imports.
Besides, a decline in crude oil prices is a positive factor for India, as it eases the inflationary pressure. In addition, a fall in crude prices can alleviate some of the pressure on the domestic currency.
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