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.
Oil prices are declining Friday morning, falling for the fourth consecutive session on fears of too aggressive monetary tightening by the Federal Reserve (Fed).
Brent May futures on London’s ICE Futures Exchange stood at $81.14 a barrel by 7:17 a.m., down $0.45 (0.55%) from the previous session’s close. Those contracts fell by $1.07 (1.3%) to $81.59 per barrel at the close of trading on Thursday.
The price of WTI crude futures for April at electronic trades of the New York Mercantile Exchange (NYMEX) is $75.12 per barrel by that time, which is $0.6 (0.79%) lower than the final value of the previous session. The contract fell by $0.94 (1.2%) to $75.72 per barrel on Thursday.
The main negative factor for the oil market this week was Fed President Jerome Powell’s “hawkish” comments admitting a possibility of hiking interest rates. Investors fear that the Fed’s tough policy may lead to a recession in the U.S., which in turn will affect demand for fuel in the world’s largest economy.
“Oil is under pressure again because of fears of Fed rate hikes,” said Stephen Innes, managing partner at SPI Asset Management.
On Friday, the U.S. labor market report for February will be released, which could influence the opinion of U.S. central bank governors. Analysts polled by Trading Economics predict it will point to maintaining unemployment at 3.4% and an increase of 205,000 jobs in the U.S. economy.
Oil is stable Thursday after declining in the previous two sessions.
Traders are assessing data on changes in fuel inventories in the U.S., as well as statements of Federal Reserve Chairman Jerome Powell.
The Fed has not yet decided on the amount by which it will raise the benchmark interest rate at the March meeting, said the head of the U.S. central bank. This, he said, will depend on statistical data on inflation and employment in the U.S., which the Fed has yet to assess.
May futures for Brent crude oil on London’s ICE Futures Exchange were quoted at $82.66 a barrel as of 7:03 a.m., the same as at the close of previous trading. The contracts were down $0.63 (0.8%) on Wednesday.
The price of WTI April futures decreased by $0.02 (0.03%) to $76.64 per barrel at electronic auctions of New York Mercantile Exchange (NYMEX). At the end of previous trading the cost of contracts has fallen by $0.92 (1.2%) to $76.66.
U.S. commercial oil inventories fell 1.69 million barrels to 478.51 million barrels last week, according to a weekly report from the Energy Department. This is the first decline in 11 weeks.
Gasoline reserves decreased by 1.13 million barrels, while distillates increased by 138,000 barrels.
Experts were expecting oil reserves to rise by 1.6 million barrels, gasoline reserves to decrease by 2 million barrels and distillates by 1.3 million barrels.
Oil prices are rising in trading Tuesday morning.
The value of May futures for Brent on London’s ICE Futures Exchange stands at $86.42 a barrel by 7:05 a.m., $0.24 (0.28%) above the previous session’s closing price. Those contracts rose $0.35 (0.4%) to $86.18 a barrel on Monday.
The price of WTI April futures grew by $0.21 (0.26%) to $80.67 per barrel at electronic trades of NYMEX by that time. At the end of previous session the contracts value grew by $0.78 (1%) up to $80.46 per barrel.
The oil market was declining for most of the day on Monday amid weaker than investors expected forecast of the Chinese authorities on the economic growth in the country in 2023, however closer to the end of trading turned to the growth.
The statement of the general director of American Pioneer Natural Resources Co. Scott Sheffield, CEO of U.S. Pioneer Natural Resources Co. said that shale oil and gas production in the Permian Basin will reach its peak level in five to six years. That’s because the best areas of the field for drilling and production are depleted, Sheffield told Bloomberg during a CERAWeek event in Houston.
Mizuho Securities USA analyst Robert Yager drew investors’ attention to Saudi state company Saudi Aramco’s price hike for European and Asian buyers for almost all grades of oil in April. “The price of the main oil grade supplied to Asia increased for the second month in a row, indicating expectations of increased demand in that region,” Yager said.
