Oil quotes are declining in the afternoon on Thursday. The market is assessing the monetary policy of the Bank of England, data on inflation and oil imports in China and waiting for the monthly OPEC report.
The price of July Brent futures on London’s ICE Futures Exchange stands at $76.25 a barrel by 2:25 p.m., down $0.16 (0.21%) from the previous session’s closing price.
The price of futures on WTI crude oil for June on electronic trade of the New York Mercantile Exchange (NYMEX) fell by that time by $0.19 (0.26%), to $72.37 per barrel.
The rate of consumer price growth in China slowed to a 0.1% annualized rate in April from 0.7% in March, data from the State Statistics Office showed. April inflation is the lowest since February 2021. Analysts on average had forecast it would weaken to 0.4%, Trading Economics noted.
In addition, China reduced oil imports in April by 16% year-on-year to 10.6 million barrels per day, adding to fears of a slowdown in its economy.
Traders may also react to the outcome of the Bank of England meeting, which raised the benchmark interest rate by 25 basis points to 4.5% per annum.
The oil market has shown itself to be a “lightning rod for volatility” of late, notes KCM Trade Senior Market Analyst Tim Waterer, whose words are quoted by MarketWatch. In his opinion, extreme price fluctuations cannot be ruled out in this regard, especially given the high sensitivity of oil prices to expectations for global economic growth.
Oil prices are rising on Monday thanks to some easing of concerns over a possible recession.
A positive factor for the market was Friday’s data on the U.S. labor market, which showed that it remains strong despite a significant tightening of monetary policy by the Federal Reserve (Fed).
“Oil prices have been falling lately because of fears of a global recession, but strong labor market data and positive comments from central bank governors offer hope that a recession can be avoided this year,” said Jamil Ahmad, chief analyst at CompareBroker.io, cited by Market Watch.
Federal Reserve Chairman Jerome Powell said last week that the U.S. economy is likely to continue growing at a moderate pace this year and avoid a recession.
In addition, traders note that China is increasing its oil purchases and demand is likely to remain strong in the next few months due to increased tourist activity in the country.
At the same time, global oil inventories are shrinking and the problem will be exacerbated by OPEC+ production cuts.
July Brent crude futures on London’s ICE Futures exchange stood at $75.7 a barrel by 8:10 a.m. Monday, up $0.4 (0.53%) from the previous session’s closing price. Those contracts rose $2.8 (3.9%) to $75.3 a barrel on Friday.
The price of WTI crude futures for June grew by $0.43 (0.6%) to $71.77 per barrel at electronic auctions of New York Mercantile Exchange (NYMEX) by that time. The contract value grew by $2.78 (4.1%) to $71.34 per barrel at the end of previous session.
Brent was down 6.3% and WTI was down 7.1% at the end of last week.
“The market decline last week was much more significant than one would have expected, judging by the supply-demand balance in the market,” said Citigroup Inc. analyst Ed Morse. Ed Morse. – We can expect oil inventories to decline, given the approach of the summer season, during which demand will rise.”
Oil prices rose on Friday despite concerns about the global economy and demand for energy resources after a rate hike in the U.S. and euro zone.
July Brent futures on London’s ICE Futures exchange stood at $73.21 a barrel by 8:04 a.m. Friday, up $0.71 (0.98%) from the previous session’s closing price. Those contracts rose $0.17 (0.2%) to $72.5 a barrel on Thursday.
The price of WTI futures for June oil grew by $0.63 (0.92%) up to $69.19 per barrel at electronic trades of NYMEX by that time. At the end of previous session the contracts went down by $0.04 (0.1%) to $68.56 per barrel, which was the lowest since March 20.
The day before, the European Central Bank expectedly raised all three key interest rates by 25 basis points (bps). Thus, the benchmark interest rate on loans now stands at 3.75%, the deposit rate at 3.25% and the rate on margin loans at 4%.
On Wednesday, the U.S. Federal Reserve also raised its key interest rate by 25 bps, its range now being the highest since 2007 at 5-5.25% per year. Meanwhile, the words about the necessity to further tighten the monetary policy disappeared from the press release on the results of the meeting.
In addition, it became known that Saudi Arabia in June will raise the price of oil with delivery to European countries, and for Asian buyers the fuel will become cheaper. Prices for oil with delivery in the U.S. next month will not change, with the exception of grade Arab Light, which will become cheaper by $0.5 per barrel, said state company Saudi Aramco.
Oil prices are stable in trading on Tuesday after declining the day before on increased fears of declining demand.
The price of July futures for Brent on London’s ICE Futures Exchange stood at $79.27 a barrel by 8:05 a.m. Tuesday, down $0.04 (0.05%) from the close of the previous session. Those contracts fell $1.02 (1.3%) to $79.31 a barrel on Monday.
The price of WTI futures for June oil grew by $0.02 (0.03%) to $75.64 per barrel at electronic trades of New York Mercantile Exchange (NYMEX) by that time. The contracts value has decreased by $1.12 (1.5%) to $75.66 per barrel at the end of previous session.
Investors are waiting for the Federal Reserve to raise its benchmark interest rate again this week, worried that further tightening of monetary policy in the U.S. will trigger a global recession, Market Watch noted.
China’s Purchasing Managers’ Index (PMI) for the manufacturing industry fell to a four-month low of 49.2 points in April from 51.9 points in March, data from China’s State Bureau of Statistics (SBS) showed. The value of the index below 50 points indicates a decline in activity in the sector. PMI in April fell below this mark for the first time since December.
In April Brent has fallen in price by 0.3% and WTI has risen by 1.5%.
Oil prices are declining on Tuesday afternoon after rising in the previous two sessions amid a stronger dollar. In addition, investors continue to evaluate the prospects for fuel demand.
The price of June Brent crude futures on London’s ICE Futures exchange stood at $82.18 a barrel by 3:17 p.m. Tuesday, down $0.55 (0.66%) from the previous session’s closing price.
The price of June WTI futures on the New York Mercantile Exchange (NYMEX) is down $0.51 (0.65%) to $78.25 a barrel by this time.
The DXY index, which shows the value of the U.S. dollar against six major world currencies, is up 0.2% in trading, making oil less attractive to holders of other currencies.
The market also fears further tightening of monetary policy by central banks, which could have a negative impact on global economic growth and demand for energy, writes Trading Economics.
Additional pressure on prices is reducing the profitability of processing at Asian enterprises. Analysts attribute the decline in profitability to, among other things, the increase in production at new refineries in the Middle East.
Oil prices of benchmark grades declined again on Monday.
Quotes rose on Friday, but at the end of the week they fell by more than 5%.
Traders are concerned that further tightening of monetary policy by the Federal Reserve and other major central banks could worsen the global economy and reduce the demand for fuel, Trading Economics said.
These factors more than offset optimism about China’s economic recovery after the lifting of strict restrictions imposed to curb the COVID-19 pandemic in late 2022, writes MarketWatch.
Amid a deteriorating economic backdrop and still hawkish behavior by the Federal Reserve, there are no real positive reasons for oil market growth, analysts believe Sevens Report Research
Brent June futures on London’s ICE Futures exchange stood at $80.53 per barrel by 8:05 a.m., down $1.13 (1.4%) from the close of the previous session. Those contracts rose $0.56 (0.7%) to $81.66 per barrel on Friday.
Price of futures on WTI crude oil for June at electronic trades of New York Mercantile Exchange (NYMEX) fell in the morning by $0.93 (1.2%) – down to $76.94 per barrel. At the end of previous session the cost of contracts rose by $0.5, or 0.7%, to $77.87 per barrel.
Last week the Brent quotations fell by 5.4% and WTI – by 5.5%.
