Weak demand causes oil prices to reverse down

Specifically, Brent oil prices decreased by 0.9%, down to 84.61 USD/barrel. At the same time, US WTI oil prices fell 0.5% to 80.61 USD/barrel.

Oil prices today turned down after the latest economic data from China and the US showed that the recovery speed after the pandemic of these two countries had cooled down. This raises concerns about the outlook for oil demand at the end of this year.

Reuters reported that US employment opportunities in February fell to their lowest level in nearly two years. That means the labor market is cooling down.

Meanwhile, data from the US Energy Information Administration (EIA) shows that US crude oil reserves have decreased by 3.7 million barrels in the week as of March 31, about 1.5 million barrels higher than the forecast.

Similarly, gasoline and distillate reserves also decreased more than expected with a decrease of 4.1 million barrels and 3.6 million barrels, respectively.

US oil inventories are also at 470 million barrels, up about 4% from the five-year average at the time of year, according to the EIA.

Traders are now waiting for a signal of a larger economic trend from US non-farm payrolls data to assess demand more objectively.

Oil prices remain high due to the plan to cut 3.66 million barrels/day, equivalent to about 3.7% of global demand from the Organization of the Petroleum Exporting Countries and its allies (OPEC+).

OPEC+'s production cuts are likely to put pressure on the US government in finding ways to cool down inflation, including oil prices.

However, the US is unlikely to accelerate production to make up for the supply shortage. Currently, US oil production is at 12.2 million barrels/day, about 500,000 barrels/day lower than before the COVID-19 pandemic.