Oil prices of benchmark grades fell on Thursday to their lowest level since early April and continue their weak decline on Friday morning.
This could be the first week of losing territory in the last five weeks. Among the negative factors is a strengthening U.S. dollar, notes MarketWatch. In addition, traders fear 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.
The quotations of June futures for Brent at London Stock Exchange ICE Futures made $81.07 per barrel by 8:02 a.m. which is $0.03 (0.04%) lower than the closing price of the previous session. The previous day those contracts fell by $2.02 (2.4%) to $81.1 per barrel.
The price of WTI futures for June oil at NYMEX fell by $0.03, to $77.34 per barrel. At the end of previous session the contracts value decreased by $1.87 (by 2.4%) to $77.37 per barrel.
According to Trading Economics, the decrease in WTI quotations since the beginning of the current week exceeds 6%.
Oil prices rise moderately on Tuesday morning after a noticeable decline in the previous session.
The price of June futures for Brent on London’s ICE Futures Exchange stood at $84.91 per barrel by 8:13 a.m., $0.15 (0.18%) above the previous session’s closing price. Those contracts were down $1.55 (1.8%) to $84.76 a barrel at the close of trading on Monday.
The price of WTI futures for May at electronic trades of the New York Mercantile Exchange (NYMEX) is $80.96 per barrel by that time, which is $0.13 (0.16%) above the final value of the previous session. The day before contract fell by $1.69 (2.1%) to $80.83 per barrel.
As it became known on Monday, the index of New York Empire Manufacturing activity rose to plus 10.8 points in April from minus 24.6 points in the previous month. The indicator climbed into positive territory for the first time in five months and hit its highest level since July 2022. Analysts polled by Trading Economics had on average expected a rise to only minus 18 points.
The indicator pointed to the resilience of the U.S. economy, which increases the likelihood of new interest rate hikes by the Federal Reserve, MarketWatch noted.
On the other hand, some traders believe that U.S. GDP growth will continue to slow, which “limits the upside potential for oil prices and increases pressure” on the market, Zaye Capital Markets investment director Naeem Aslam said.
He said oil prices are more likely to decline than to rise, with prices likely to dip below $80 a barrel.
Oil prices are stable on Monday after a rise last week on fears of supply shortages in the market.
June Brent futures on London’s ICE Futures exchange stood at $86.28 a barrel by 8:10 a.m. Monday, down $0.03 (0.03%) from the previous session’s closing price. Those contracts rose $0.22 (0.3%) to $86.31 a barrel on Friday.
The price of WTI futures for May at electronic trades of NYMEX fell by $0.04, to $82.48 per barrel by that time. At the end of previous session the cost of contracts grew by $0.36 (0.4%) to $82.52 per barrel.
Last week Brent gained 1.4% and WTI gained 2.3%. Both grades rose in price for the fourth week in a row.
The market was supported by the forecast published on Friday by the International Energy Agency, according to which the global supply shortage in the third quarter will amount to 2 million barrels per day. “A serious oil deficit in the second half of the year was previously expected, but another reduction (of production by OPEC+ countries – IF-U) threatens to further squeeze supply and increase oil prices at a time when inflationary pressures are already hurting vulnerable consumers,” the agency said in a review.
In the second quarter, the deficit will be 400 thousand b / c, IEA predicts. Previously, the agency expected demand to exceed supply only in the third quarter. The average deficit in 2023 is estimated at 800,000 bpd.
OPEC, which published its monthly forecast a day before the IEA, still expects oil demand to increase by 2.3 million barrels per day (bpd) in 2023, to 101.89 million bpd – above pre-survey levels.
“Obviously, the recent decision by OPEC+ countries to cut production has given a boost to oil prices,” said ING Groep NV analyst Warren Patterson. – Nevertheless, we are seeing refiners’ profit margins shrink, indicating weak demand for petroleum products.”
S&P Global Inc. notes signals of lower diesel demand both in China and in the U.S. and Europe.
Oil prices are stable Wednesday ahead of the release of last week’s U.S. energy inventory data and the country’s March inflation report.
June Brent crude futures on London’s ICE Futures exchange stood at $85.65 a barrel by 8:05 a.m. Wednesday, up $0.04 (0.05%) from the previous session’s close. Those contracts rose $1.43 (1.7%) to $85.61 a barrel on Tuesday.
The price of WTI futures for May oil grew by $0.07 (0.09%) to $81.6 per barrel at electronic trades of the New York Mercantile Exchange (NYMEX) by that time. Contracts rose $1.79 (2.2%) to $81.53 a barrel in the previous session.
“The recent OPEC+ decision to cut production continues to support the oil market,” said Warren Patterson, who is responsible for oil market strategy at ING Groep NV.
“However, at the moment all traders’ attention is focused on data on consumer price dynamics in the U.S., and higher-than-expected inflation will have a negative impact on risky assets,” Patterson was quoted by Bloomberg.
These data will be published by the Labor Department of the USA on Wednesday at 15:00 Moscow time. Experts questioned by Trading Economics on average predict a slowdown of inflation in the country in March to 5.2% on an annualized basis from 6% in February.
The market’s attention is also directed to the U.S. Energy Department’s report on the country’s energy inventories for the week ended April 7, which will be released at 5:30 p.m.
According to the American Petroleum Institute (API), released on Tuesday night, U.S. oil inventories rose by 377,000 barrels last week after falling by 4.3 million barrels a week earlier. Experts polled by Trading Economics, on average, had expected a 1.3 mln barrel increase in inventories.
Stocks at Cushing terminal, which stores oil traded on Nymex, decreased by 1.4 million barrels, API data show. If this estimate is confirmed by official data, the reduction in inventories in Cushing will be noted at the end of the sixth week in a row.
Oil prices are rising Tuesday morning, recovering from a sharp decline the day before.
The value of June futures for Brent on London’s ICE Futures Exchange stood at $84.73 a barrel by 8:05 a.m., $0.55 (0.65%) above the previous session’s closing price. Those contracts fell 94 cents to $84.18 per barrel at the close of trading on Tuesday.
The price of WTI futures for May at electronic trades of the New York Mercantile Exchange (NYMEX) is $80.33 per barrel by that time, which is $0.59 (0.74%) above the final value of the previous session. The day before, the contract fell by 96 cents to $79.74 per barrel.
The publication of reports by the U.S. Energy Information Administration, the International Energy Agency and OPEC will be key events for the oil market this week.
Investors are also waiting for data on U.S. inflation in March. Analysts polled by Trading Economics forecast that the pace of consumer price growth in the U.S. slowed to 5.2% in March from February’s 6%.
The spread between Brent futures for December of this year and December next rose to $5.5 a barrel from $2.5 a barrel three weeks earlier. This indicates that the market fears a reduction in inventories, notes Bloomberg.
Oil quotations changed little during the day on Thursday and ended the short week with an active rise.
June Brent futures on London’s ICE Futures Exchange rose $0.11 (0.13%) to $85.1 a barrel by 2:31 p.m.
By the same time quotations of WTI futures for May grew by $0.03 (0.04%) to $80.64 per barrel on the electronic auctions of the New York Mercantile Exchange (NYMEX).
Both grades gained about 6% since the beginning of the week due to the unexpected decision of some OPEC+ countries to voluntarily lower oil production from May to the end of this year. Analysts believe this will lead to a shortage of fuel on the world market later this year.
The oil market was also supported by the data that last week the oil reserves in the USA dropped by 3.74 mln barrels, gasoline reserves – by 4.12 mln barrels and distillates – by 3.63 mln barrels. Analysts on average had predicted a more moderate decline in reserves in all three categories.
“The bullish momentum in the oil market may have subsided, but the upside potential remains given declining supplies,” wrote PVM Oil Associates Ltd. brokerage analyst Stephen Brennock. Stephen Brennock. – The market will experience shortages this quarter, and they will only intensify in the second half of the year.”
Brent and WTI will be traded only electronically on Friday as the world’s leading exchanges will be closed due to the holiday (Good Friday).
