Global oil prices rose over 1% in European trade on Wednesday after a surprise drop in US crude stocks last week according to initial data, with the official numbers released later today from the EIA.

Prices are also boosted by OPEC’s commitment to an optimistic view for global demand growth on oil in the next two years.

Prices

US crude rose 1.2% to $78.92 a barrel, with a session-low at $77.60, while Brent added 1.1% to $83.20 a barrel, with a session-trough at $81.99. 

US crude fell 0.1% on Tuesday, while Brent gave up 0.15% as the dollar rebounded against major rivals. 

US Crude Stocks 

Initial data from the American Petroleum Institute showed commercial crude stocks down by 5.5 million barrels in the week ending March 8, while analysts expected a build of a million barrels. 

According to the data, total stocks have thus fallen to 452.6 million barrels, a month low, in a positive sign for demand in the world’s largest fuel consumer. 

Now traders await official data from the Energy Information Administration, expected to show a buildup of 0.9 million barrels, the seventh such weekly increase in a row.

Global Demand 

OPEC has upheld its forecasts for strong demand growth on oil by 2.25 million bpd in 2024, and by 1.85 million bpd in 2025, while increasing forecasts for global GDP growth this year. 

Gold prices fell in European trade on Wednesday on track for the second loss in a row off record highs amid active profit-taking, while the dollar rebound after surprise US inflation data. 

Such numbers showed that inflationary pressures are still ongoing on the Federal Reserve’s monetary policy, in turn hurting the odds of a Fed interest rate cut in June.

Gold Prices Today

Gold prices fell 0.15% to $2155 an ounce, with a session-high at $2161, after losing 1.15% on Tuesday, the first loss in 10 days on profit-taking off record highs at $2195. 

The Dollar 

The dollar index rose 0.1% on Wednesday on track for the third straight session against a basket of major rivals, in turn pressuring gold and other greenback-denominated metal prices. 

The dollar was boosted by recent inflation data which proved resilient and stubborn. 

US Inflation Data

US consumer prices rose 3.2% y/y in February, above estimates of 3.1%, while core prices, excluding food and energy, rose 3.8% in February, above estimates of 3.7%. 

US Rates

After the data, the odds of a Fed interest rate cut in May fell to 12%, while the odds of such a cut in June fell to 67%. 

The SPDR

Gold holdings at the SPDR Gold Trust remained flat yesterday at 815.13 tonnes, the lowest since July 2019. 

Sterling fell in European trade on Wednesday against a basket of major rivals, extending losses for the third straight session against the dollar away from eight-month highs on active profit-taking, while traders analyze UK interest rate prospects. 

Recent UK wages data showed reduced inflationary pressures and thus bolstered the case for a UK interest rate cut in June.

Losses are diminished by data that showed the UK economy returned to growth in January after slipping into contraction in previous months. 

GBP/USD

GBP/USD fell 0.15% to 1.2776, with a session-high at 1.2799, after closing down 0.2% on Tuesday, the second loss in a row on profit-taking off an eight-month high at 1.2894.

The pound was hurt by UK wages and labor data, which once again bolstered the case for an early UK interest rate cut in June. 

Official UK data showed average wages rose 5.6% in January, down from 5.8% in December, which could indicate a slowing inflation arc.

Growth 

UK data also showed GDP growth at 0.2% m/m in January as expected, after a 0.1% contraction in December. 

Deutsche Bank’s analysts said in a memo that the UK economy has turned the corner and is now likely to head for successive growth rates throughout the year.  

The tech world is now ablaze with its fourth industrial revolution, with major trends revolving around AI, cryptocurrencies, and clean energy technology. 

AI gained massive momentum recently with the launch of the language processing software ChartGPT to mass consumers, amassing over 100 million users after only 60 days of launching in November 2022.

Energy companies are now utilizing AI tools to analyze a wide array of data, geopolitical maps, and to identify potential issues such as overused equipment, with the Dutch energy company Shell recently announcing plans to use AI technology to help explore the deep sea and potentially extract energy from there. 

Earth science fields are also aiming to utilize AI tech to depict a more accurate picture of earthquake activity with better prediction power. 

In the cryptocurrency field, the bitcoin craze has sent the virtual currency to successive record highs, most recently to near $73 thousand, with massive crypto mining causing heavy pressures on grids worldwide. 

We finally tackle the renewable energy field with investment surging by 17% worldwide in 2023 to $1.8 trillion, with almost $1.7 invested in renewable energy for every dollar invested in fossil fuels. 

All these directions are siphoning massive amounts of electricity from the grid, especially exhausting the US grid system and causing breakage. 

It’s a very delicate and complicated balance to maintain for local governments, as the need to expand energy infrastructure and sources by the immediately available fossil fuels contradict the drive to rely more heavily on renewable sources, which remain fickle in many sectors and areas in the US and worldwide.

Many pioneers in the industry have pointed to the surging energy requirement for the fourth industrial revolution, with Open AI CEO Sam Altman noting that the world needs an energy breakthrough, like nuclear fusion, for AI to achieve full potential.  

Altman has recently invested $375 million in the private nuclear fusion research company Helion Energy in hopes of achieving progress some time in the next 15 years. 

AI servers are known for their massive appetite for energy consumption, posing an intractable barrier to mass utilization of such technology in the near term. 

Bitcoin mining continues to pick steam as well, with estimates that its mining consumes 148.64 terawatts per hour of electricity a year, almost the same as the entire country of Malaysia, with US authorities estimating that bitcoin mining is alone responsible for 2.3% of total electricity consumption in the US.