Wall Street Edges Lower on Fears of Continued Interest Rate Hikes by the Fed Amid Decline in Oil Inventories
Oil and gasoline prices slipped on the stock trading market after a heated report by the EIA. The EIA reported a high decrease in crude inventories for the end of the week of April 14 and the previous week.
In the U.S., crude oil inventories decreased by a total of 4.6 million barrels for the end of the week of April 14, despite the 1.3 million barrel increase last week.
Crude oil prices fell shortly by 2.21% to below the $80 per barrel level, or more accurately to $79 per barrel. The EIA report also added that the crude oil balance has declined to 1.088 million barrels.
Still, gasoline inventories jumped by 1.3 million barrels versus a decline of 0.3 million barrels last week; consensus is that the inventories are short at 1.26 million barrels.
The decrease in oil inventories and the low banking and cooperation earnings have raised market expectations for higher and continued interest rate hikes.
In turn, this higher explanation from the Federal Reserve has affected Wall Street gains on Wednesday trading hours. Wall Street’s main indexes edged lower on Wednesday; the S&P 500 benchmark slipped by 0.05% to 4,150.40 basis points. The heavy tech index on the Nasdaq rose by 0.11% to 12,156.22 basis points. where the Dow Jones futures declined by 0.21% to 33,904.30 basis points.
The continued decline in crude oil inventories will largely affect U.S. manufacturing and economic activities in the coming days. The Biden administration relied more on the SPR to balance the oil market’s huge supply. As oil demand continues to grow its inventories are declining at this moment.
The EIA added that as of the end of the week of April 14, the SPR had declined to its lowest level for the first time since November 1983. Last week, only the SPR declined by 1.6 million barrels.
According to the report data, the distillate inventories fell approximately by 0.4 million barrels last week, a consensus of -0.92 million.
Low oil inventories can have significant effects on the economy, leading to higher costs, reduced employment, and slower economic growth. However, the effects can vary depending on the specific circumstances, such as the degree of reliance on oil, the availability of alternative energy sources, and the level of global oil demand.
On a global scale, the oil demand is increasing, especially in China and India, due to the easing policy that Russia is offering its allies. Yet the U.S. and EU countries’ oil supply is way behind the actual market demand.
All these factors make investors certain of higher and higher interest rates from the U.S. Federal Reserve.
. As a result, investors are certain of more and higher interest rates by the U.S Federal Reserve. The next meeting is expected to be held by the first week of May, and market expectations are above the 60% of a quarter basis point interest hike.