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 fell again on Thursday.
Investors fear that high interest rates may have a negative impact on global economic growth and fuel demand. The Federal Reserve is expected to raise its benchmark rate by 25 basis points in May and the European Central Bank is expected to hold three more hikes in the next few months, Trading Economics reported.
The price movement shows “evidence that there are still some concerns about the demand outlook,” said Warren Patterson, head of commodity strategy at ING.
Brent June futures on London’s ICE Futures exchange stood at $82.16 a barrel by 8:23 a.m. Thursday, down $0.96 (1.15%) from the previous session’s close. The day before those contracts fell $1.65 a barrel (nearly 2%) to $83.12 a barrel, the lowest level since March 31.
The price of WTI futures for May crude oil fell by $0.88 (1.1%) to $78.28 per barrel at the electronic trading on the New York Mercantile Exchange (NYMEX). The contract value decreased by $1.7 (2.1%) to $79.16 per barrel at the end of previous session.
The market was not supported even by the latest data on changes in fuel reserves in the USA.
The country’s oil reserves decreased by 4.58 million barrels last week, the Energy Department said on Wednesday. Experts from S&P Global Commodity Insights expected a reduction of only 400,000 barrels.
Meanwhile, gasoline stocks increased by 1.3 million barrels, while distillate stocks decreased by 355 thousand barrels. Analysts forecasted the reduction of the first indicator by 1.6 million barrels, the second – by 600 thousand barrels.
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 rising on Friday after the International Energy Agency (IEA) published its monthly review of the oil market.
June Brent crude futures on London’s ICE Futures exchange stood at $86.43 a barrel by 2:24 p.m. Friday, up $0.34 (0.39%) from the previous session’s closing price.
The price of WTI crude futures for May oil in trading on the New York Mercantile Exchange (NYMEX) was up $0.31 (0.38%) to $82.41 a barrel by that time.
The IEA predicts a supply shortfall in the market of 2 million barrels per day in the third quarter. “Serious oil shortages in the second half of the year had been 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 believes. Previously, it expected demand to exceed supply only in the third quarter. The average deficit in 2023 is estimated at 800 thousand bpd.
OPEC, which published its monthly forecast the day before, still expects oil demand to increase by 2.3 million barrels per day (bpd) in 2023, to 101.89 million bpd – above the pre-survey level.
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).
