Oil prices are falling sharply on Thursday afternoon amid a strengthening U.S. dollar and after Wednesday’s release of data on a significant reduction in U.S. inventories.
July Brent crude futures on London’s ICE Futures exchange stood at $76.94 a barrel by 2:26 p.m. Thursday, down $1.42 (1.81%) from the previous session’s closing price.
The price of WTI crude futures for July on the New York Mercantile Exchange (NYMEX) electronic trading was down $1.46 (1.96%) to $72.88 a barrel by that time.
The DXY index, which shows the value of the U.S. dollar relative to the six major world currencies, is up 0.2% in trading, making oil less attractive to holders of other currencies.
Meanwhile, the oil and gas industry is expected to increase upstream investment by 7% in 2023, to more than $500 billion, the International Energy Agency (IEA) points out in its annual World Energy Investment Outlook.
“Many major oil and gas companies have announced expansion of investment programs due to record revenues,” the IEA notes. – However, due to uncertainty about relatively long-term demand, cost concerns, and calls from many investors and owners to focus on profitability as opposed to production growth, only the major oil state companies in the Middle East will spend much more in 2023 than in 2022, and this is the only part of the sector where investment will exceed pre-pandemic levels.”
The day before, we also learned that U.S. oil inventories fell by 12.456 million barrels last week. This is the sharpest drop since November 2022, Trading Economics wrote.
Gasoline reserves fell by 2.05 million barrels and distillates by 561,000 barrels.
Experts polled by S&P Global Commodity Insights expected oil reserves to decrease by 500 thousand barrels, gasoline reserves to decrease by 2.1 million barrels and distillates reserves to decrease by 600 thousand barrels.
