Oil prices continue to decline after last week’s drop, which was the most significant since last summer.
Negative sentiment in the oil market is due to concerns that the crisis in the U.S. banking sector can provoke a recession in the U.S. economy, reports MarketWatch.
The quotations of May futures for Brent oil on London’s ICE Futures Exchange as of 7:04 a.m. were $72.29 a barrel, which is $0.68 (0.9%) lower than the price at the close of the previous session. Those contracts fell $1.73 (2.3%) to $72.97 a barrel on Friday, the lowest level since December 20.
The price of WTI April futures on the New York Mercantile Exchange (NYMEX) fell $0.6 per barrel to $66.14 on Monday morning. The contract value fell by $1.61 (2.4%) to $66.74 a barrel at the end of previous session. This is the minimum since December 3.
Brent crashed by 11.9% in five trading days and WTI by 13%. This is the most significant weekly decline respectively since last August for European oil and since June for U.S. oil.
“Oil prices have been particularly susceptible to negativity amid the current market turmoil,” believes Commerzbank commodity analyst Barbara Lambrecht, referring to problems in the U.S. banking sector. At the same time, she believes “the drop in oil prices is excessive and mostly speculative.
Oil prices rise on Friday, but end the week with a significant decline amid a general decline in risk appetite in global markets due to the situation in the U.S. banking sector.
May Brent crude futures on London’s ICE Futures exchange are at $75.5 a barrel by 7:05 a.m. Q, up $0.8 (1.07%) from the previous session’s closing price. Those contracts rose $1.01 (1.4%) to $74.7 a barrel on Thursday.
The price of WTI crude futures for April at electronic trades of the New York Mercantile Exchange (NYMEX) rose by $0.75 (1.1%) by that time to $69.1 per barrel. The contract value grew by $0.74 (1.1%) to $68.35 per barrel at the end of previous session.
Both Brent and WTI have fallen more than 10% since the beginning of this week, which is the worst weekly dynamics for the market since the beginning of this year.
Traders are keeping a close eye on OPEC+, believing the cartel countries may take action in response to the market drop, Bloomberg noted.
“External factors continue to dictate conditions to the oil market,” said Warren Patterson, who is responsible for strategy in commodity markets at ING Groep NV. – The downturn in the market is probably a concern for OPEC+, but it is unlikely to act quickly. OPEC+ is more likely to wait for the situation to calm down.”
Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman and Russian Deputy Prime Minister Alexander Novak on Thursday affirmed their countries’ commitment to the October 2022 OPEC+ decision to cut oil production by 2 million bpd by the end of 2023.
A day earlier, the Saudi prince told Energy Intelligence that the oil market is subject to very high uncertainty, so OPEC+ does not intend to change the parameters of the deal adopted last October.
Oil prices are rising on Thursday morning, rising from the previous day’s lows since December 2021.
The value of May futures for Brent on London’s ICE Futures exchange is $74.63 a barrel by 7:18 a.m., up $0.94 (1.28%) from the close of the previous session. Those contracts fell by $3.76 (4.9%) to $73.69 per barrel at the close of trading on Wednesday.
The price of WTI futures for April at electronic trades of the New York Mercantile Exchange (NYMEX) is $68.42 per barrel by that time, which is $0.81 (1.2%) above the final value of the previous session. The contract fell by $3.72 (5.2%) to $67.61 per barrel on Wednesday.
The fall of oil quotations was caused by concerns that the problems of the banking sector amid rising interest rates might lead to a global recession, writes MarketWatch.
In addition, released the day before, the U.S. Energy Department data showed an increase in oil reserves over the past week by 1.55 million barrels. The increase was recorded at the end of the 11th week of the last 12 weeks.
Gasoline reserves decreased by 2.06 million barrels and distillates by 2.54 million barrels.
Experts were expecting oil reserves to grow by 1.5 million barrels, gasoline reserves to decrease by 1.62 million barrels and distillates reserves to drop by 1.4 million barrels.
Oil prices are rising on Wednesday after falling the day before to their lowest since December last year on increased fears of a recession in the U.S. as a result of problems in the banking sector.
Brent crude futures on London’s ICE Futures Exchange stood at $78.52 a barrel by 7:05 a.m., up $1.07 (1.38%) from the close of the previous session. Those contracts fell $3.32 (4.1%) to $77.45 a barrel on Tuesday.
The price of WTI April futures at electronic trades of NYMEX grew by that time by $1.09 (1.52%) to $72.42 per barrel. At the end of previous session the contracts cost decreased by $3.47 (4.6%) down to $71.33 per barrel.
Both Brent and WTI futures closed Tuesday at their lowest levels since Dec. 9.
“The oil market is acting as if a recession in the economy is imminent,” notes Price Futures Group analyst Phil Flynn, quoted by Market Wach. – With signals of increased demand in China and a pullback in the U.S. dollar, one would expect oil to withstand all this economic turmoil.”
OPEC on Tuesday kept its forecast for global oil demand growth in 2023 at 2.3 million bpd. The organization raised its forecasts slightly for the first three quarters of 2023 and lowered them for the fourth.
According to the monthly report, stronger demand growth in China will offset declines in the U.S. and Europe.
The International Energy Agency (IEA) will release its review on Wednesday.
Oil prices continue to decline on Tuesday amid a general withdrawal of investors from risk due to the situation around Silicon Valley Bank in the United States.
May Brent crude futures on London’s ICE Futures exchange stood at $79.91 a barrel by 7:05 a.m., down $0.86 (1.06%) from the previous session’s closing price. Those contracts fell $2.01 (2.4%) to $80.77 a barrel on Monday.
The price of WTI April futures on NYMEX fell by $0.82 (1.1%) to $73.98 per barrel by that time. The contracts value has fallen by $1.88 (2.5%) to $74.8 per barrel at the end of previous session.
As it was informed, Silicon Valley Bank last Friday was taken over by the Federal Deposit Insurance Corporation. The latter transferred assets of the bank to a new legal entity and promised to provide full compensation to all depositors.
In connection with these events, the Federal Reserve System (FRS) announced a new mechanism for providing funds to financial institutions totaling $25 billion.
On Tuesday, traders’ attention is focused on U.S. consumer price data for February, which is important for the Fed’s decision on the future level of the benchmark interest rate.
The futures market estimates a less than 50 percent chance of a 25 basis points (bps) Fed rate hike at the March meeting, although last week traders considered a 50 bps hike to be the most likely scenario, Bloomberg notes.
“The oil market could not avoid the consequences of the Silicon Valley Bank collapse,” notes Warren Patterson, who is in charge of commodity markets strategy at ING Groep NV. – High market volatility may persist in the short term, given the upcoming release of U.S. inflation data.”
OPEC will release its monthly oil market report on Tuesday, and the market awaits a similar review from the International Energy Agency (IEA) on Wednesday.
Oil prices are showing moderate growth on Monday morning after a sharp decline last week.
The cost of May futures for Brent on the London ICE Futures exchange at 7:02 a.m. is $83.11 per barrel, which is $0.33 (0.4%) higher than the price at the close of the previous session. As a result of trading last Friday, these contracts rose by $1.19 (1.5%) to $82.78 per barrel.
The price of WTI futures for April in electronic trading on the New York Mercantile Exchange (NYMEX) is currently $77.01 per barrel, which is $0.33 (0.43%) higher than the final value of the previous session. Last Friday, the contract rose in price by $0.96 (1.3%) to $76.68 per barrel.
At the end of last week, Brent fell by 3.6%, WTI – by 3.8%.
The main negative factor for the oil market last week was the fear of a more aggressive monetary policy of the Federal Reserve. Federal Reserve Chairman Jerome Powell said that the central bank would have to raise rates more than previously expected to fight inflation.
In addition, on Friday it became known that the American bank Silicon Valley Bank came under the control of the Federal Deposit Insurance Corporation (FDIC). The FDIC will sell the assets of Silicon Valley Bank, which will allow it to make payments on uninsured deposits.
“Fears of further tightening of the SAR and risks in the financial industry have raised concerns about demand,” said Charu Chanana, market strategist at Saxo Capital Markets Pte. Charu Chanana, a market strategist at Saxo Capital Markets Pte.
Meanwhile, the number of operating oil rigs in the United States last week decreased by 2 units to 590, according to oilfield services company Baker Hughes. The number of rigs declined for the fourth week in a row, updating the lowest level since June last year.
