Due to the increase in crude oil inventories in the United States and the Federal Reserve's decision to maintain interest rates, which indicates a rise in borrowing costs, ICE Brent crude oil futures fell slightly in today's Asia morning trading.

As of 12:00 Beijing time, the expiring August Brent crude oil contract price is $82.34 per barrel, down 26 cents from the settlement price on June 12, while the contract closed up 68 cents from the previous trading day. In terms of product structure, the operating incomes of 10-30 billion yuan products were 401/1288/60 million yuan, respectively.

The New York Mercantile Exchange (NYMEX) July crude oil contract price was $78.26 per barrel, down 24 cents from the settlement price on June 12, while the contract closed up 60 cents from the previous trading day.

The U.S. Energy Information Administration (EIA) reported that last week, U.S. crude oil inventories increased by 3.7 million barrels due to the highest import volume since 2018. As of the week ending June 7, U.S. crude oil inventories rose to 459.7 million barrels, up from 455.9 million barrels the previous week. Compared with the same period last year, inventories fell by 7.5 million barrels.The inventory on the Gulf Coast of the United States increased by 6.1 million barrels to 266.7 million barrels, the highest level since April 7, 2023. Inventory in the Cushing storage center in Oklahoma decreased by 1.6 million barrels to 33.8 million barrels, an 8.3 million barrel decrease from the same week last year.

The crude oil inventory of the U.S. Strategic Petroleum Reserve (SPR) increased by 339,000 barrels to 370.5 million barrels, but SPR inventories are not included in the total commercial crude oil inventory of the EIA.

On June 12, the Federal Reserve maintained its target rate at a 23-year high, while officials said they expected only one 0.25-percentage-point rate cut later this year. Fed officials and policymakers in the latest economic forecast project that by 2024, the target rate range will approach the midpoint of 5.1%, compared with the midpoint of 4.6% in March, meaning only one 0.25-percentage-point rate cut, less than the previously expected three possible rate cuts. Rising borrowing costs will restrain demand for commodities such as housing, autos, and machinery, which could eventually put pressure on oil demand.

Fed Chairman Powell said after the meeting that a reduction in the federal funds rate target range would only be considered when there is greater confidence that inflation is sustainably below 2%. This suggests that, despite the need for economic growth and employment, the Fed is cautious about adjusting monetary policy.

On June 12, the U.S. government announced further sanctions on Russia's future liquefied natural gas (LNG) projects and flagship Arctic upstream project Vostok Oil to limit Moscow's future energy export potential. The latest round of sanctions, announced on the eve of the G7 summit in Italy, added economic pressure to Novatek's Arctic LNG 2 project which produces 19.8 million tons per year. However, the U.S. continues to maintain sanctions exemptions on Russia's oil and gas exports.

(The above content is from Argus, an independent international energy and commodity price assessment agency)