Oil prices rose slightly in early Asian deals on Wednesday, June 28, after published statistics showed that crude oil inventories in the US declined last week. At the same time, the expectation of new signals about world interest rates keeps traders on their toes. If rates continue to rise, this will have a negative impact on the growth rate of the global economy and, consequently, on energy demand.

It is worth recalling that oil prices have fallen sharply over the past five sessions, just amid ongoing fears that higher interest rates will put pressure on economic activity and undermine oil demand, writes Investing.com. Short-term signs of supply cuts and some, shall we say, resilience of the US economy have done little to limit weakness in oil markets this year as economic conditions worsen in the rest of the world.

Futures for Brent crude rose 0.2% to $72.63 a barrel, while West Texas Intermediate rose 0.2% to $67.80. Both contracts are down almost 7% each - or about $5 - over the past five sessions.

U.S. inventories are expected to shrink due to rising oil demand in the summer. As some positive signals for the oil markets, we can consider the data of the American Petroleum Institute (API). They showed US inventories fell by 2.4 million barrels in the week ended June 23, 1.47 million barrels more than expected. The sharp drop in gasoline inventories indicates an increase in demand for fuel, which is not surprising for the world's largest consumer of oil against the backdrop of a travel-heavy summer season.

The API data usually foreshadows a similar trend in the Energy Information Administration's stock figures, which will be released later this evening. Falling stocks point to some cuts in US supplies, especially as near-term demand improves.

The head of the US Central Bank, Jerome Powell, already warned last week that the Fed could raise interest rates at least two more times this year. The head of the European Central Bank, Christine Lagarde, also announced new rate hikes. The prospect of growth, coupled with deteriorating economic conditions around the world, has weighed heavily on oil prices this year, despite Saudi Arabia's repeated production cuts and supply cuts.

It remains to add to this the slower-than-expected recovery of China's economy, which also raises concerns about weak fuel demand in the world's largest oil importer.

The stakes are rising. But not for oil
The situation on the oil market is still vulnerable: today Brent can test the strength of $70-72 per barrel, the zone of lows of the year, says Evgeny Loktyukhov, head of economic and sectoral analysis at Promsvyazbank. He recalled that Brent quotes fell noticeably yesterday after the head of the ECB said that it is unlikely that it will be possible to reach a peak in rates in the near future, and that they will definitely be raised in July.

“The prospect of the leading central banks dragging out the phase of raising rates - already high ones - in order to more confidently slow down inflationary processes, forces investors to take into account the risks of the economies of developed countries entering a recession in the next few quarters, and, as a result, a decline in demand. Uncertainty about the sustainability of the recovery of economic activity in China also dominates the market, despite encouraging statements by representatives of the authorities of the Middle Kingdom, ”the expert says.

Today, Brent crude is traded in a symbolic "plus", are slightly below the mark of $73 d per barrel. Market participants found the reason for a timid rebound in the data of the American Petroleum Institute (API) on a more significant than expected reduction in US crude oil inventories last week (-2.408 million barrels), setting the fact that the weekly period will also be positive for oil. US Department of Energy report, which comes out tonight.

As Loktyukhov believes, today Brent quotes can test the strength of the support zone of $70-72 per barrel, leaving below which can speculatively increase the downward momentum. The main trigger for pressure on the oil market remains concerns about the growth of key rates in Western countries. The news risk today is the speech of the head of the Fed, George Powell: the latest statistics on the US is likely to support the Fed's inclination to raise the key rate.

This unusual, unusual June
Oil prices are trading in the lower half of a two-month trading range this week, says Igor Galaktionov, an expert on the stock market at BCS World Investments. He confirms that the risks to the global economy due to rising interest rates are back on the agenda and captured the attention of market participants.

“Meanwhile, supplies remain tight, keeping Brent from falling too low. This week, prices are not expected to drop below $70 per barrel, and next week a recovery to the $75-76 region is not ruled out,” the analyst says.

The situation on the oil market changed over the week and came under the control of the “bears”, confirms the financial analyst of the Finmir marketplace Sergey Chevrychkin. Since June 22, according to him, the quotes of “black gold” have fallen by 5.3%, and since the beginning of the month they have decreased by 2.1%.

The expert notes that this month, in terms of quotes dynamics, is still different from the average monthly changes collected since 1989. According to statistics, in June oil grows by an average of 1.3%. The price of the asset has approached the minimum values ​​of this year and is testing the support zone of $71.5-72.7 per barrel. Three times this year, the asset bounced off this resistance zone.

“Today we assume high volatility in oil prices amid expectations related to the speech of the head of the US Federal Reserve at 16:30 Moscow time, as well as weekly statistics on crude oil inventories, which is released at 17:30 Moscow time.

As Chevrychkin points out, there are a number of main reasons that affect demand and put pressure on oil prices. Thus, the pace of economic recovery in China has not justified expectations for oil demand. Fears of a decrease in demand during a recession also play a role, including against the backdrop of statements and an aggressive tightening of the monetary policy of the US Federal Reserve.

The third factor, the analyst continues, is the stable export of oil-producing countries.

Technical analysis indicators, however, point to a neutral situation, where there is no overbought or oversold condition for the asset. Therefore, the oil price chart, indicates Chevrychkin, signals two possible scenarios. The first is the breakdown of the support zone of $71.5-72.7 per barrel, which opens the way to the price range of $64.6-65.8 s per barrel. And if sellers continue to dominate the market, then June will be the eighth month in a row for oil prices to fall.

The second option - a rebound from the resistance zone - with a high probability will return prices to a wide flat trend, in which the asset is traded this year with a chance of quotations rising to $87.7-89.7 per barrel. According to Sergei Chevrychkin, it is worth paying attention to the latest OPEC forecasts for "black gold", according to which world oil demand will grow to 110 million barrels per day by 2045. That is, 23%