- Oil prices have picked bids around $84.00 after a corrective move.
- The EIA is expected to report a build-up of oil inventories by 0.2M barrels.
- Hawkish monetary policies by global central banks may impact oil demand ahead.
West Texas Intermediate (WTI), futures on NYMEX, have rebounded after dropping to near $84.00 in the Tokyo session. The oil prices corrected in the late New York session after reporting healthy gains as the American Petroleum Institute (API) displayed a build-up of stockpiles for the last week ending October 24.
The oil stockpiles reported addition of 4.52M barrels of oil, indicating a decline in oil demand last week. It is worth noting that the US administration is releasing oil from the Strategic Petroleum Reserve (SPR) to address OPEC cuts in the global oil supply. Therefore, the oil inventory buildup could result from additional oil infusions.
A tug of war between distinct ideologies of the US administration and the oil cartel as the former has pledged to weaken oil prices to trim global inflationary pressures while the latter believed the oil prices are imbalanced and are required to be stabilized with production cuts.
US President Joe Biden announced that the oil released from SPR would be replenished once oil prices drop below $70.00.
Going forward, the critical oil report from Energy Information Administration (EIA) will display a true picture of oil inventories. As per the projections, the EIA report will report a marginal build-up of oil by 0.2M barrels.
Meanwhile, the People’s Bank of China (PBOC) has announced a liquidity infusion of CNY 280B through seven-day Reverse Repo at 2% through open market operations.
This week, monetary policies from global central banks will be the major trigger. The Bank of Canada (BOC), the European Central Bank (ECB), and the Bank of Japan (BOJ) will announce their interest rate decision. The BOC and ECB are expected to deliver a hawkish stance while the BOJ would stick to its dovish remarks.
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