Oil prices are moderately lower on Tuesday morning after a sharp decline on Monday, triggered by expectations of interest rate hikes by central banks around the world.
The price of March futures for Brent on London’s ICE Futures Exchange stood at $84.85 a barrel by 7:09 a.m., down $0.05 (0.06%) from the close of the previous session. Those contracts fell $1.76 (2%) to $84.9 a barrel at the close of trading on Monday.
The price of WTI futures for March at electronic trades of the New York Mercantile Exchange (NYMEX) makes $77.54 per barrel by that time, which is $0.36 (0.46%) lower than the final value of the previous session. At the end of last session, the contract fell by $1.78 (2.2%) to $77.98 per barrel.
This week will be the first meetings of the world’s leading central banks – the U.S. Federal Reserve, European Central Bank and Bank of England. The Fed is expected to slow the pace of key rate hikes to 25 basis points from 50 bps in December, and the ECB and Bank of England will again increase borrowing costs by 50 bps.
“A hawkish attitude toward further rate hikes will cause weakness in the oil and oil products market,” StoneX analysts wrote in a letter to clients.
Traders are also trying to take a cautious approach ahead of Wednesday’s next OPEC+ ministerial meeting.
The OPEC+ committee is unlikely to signal any changes in production “given the continued certainty in the market, both on the demand and supply side,” ING strategists Warren Patterson and Ava Manty said.
The price of March futures on London’s ICE Futures Exchange stood at $86.28 per barrel by 7:10 a.m., down $0.38 (0.44%) from the close of the previous session. At the close of trading last Friday those contracts fell by $0.81 (0.9%) to $86.66 per barrel.
The price of WTI futures for March at electronic trades of the New York Mercantile Exchange (NYMEX) is $79.31 per barrel by that time, which is $0.37 (0.46%) below the final value of the previous session. The contract fell by $1.33 (1.6%) to $79.68 per barrel at the end of last session.
Brent was down 1.1% and WTI, down 2.4% at the end of last week.
“Oil traders are locking in profits at the end of the month and taking a wait-and-see attitude ahead of OPEC+ and Federal Reserve meetings, the outcome of which will be known on February 1, and ahead of the entry into force of the EU ban on the import of Russian oil products on February 5,” said Phil Flynn, senior market analyst at The Price Futures Group.
Meanwhile, the number of active oil rigs in the U.S. fell four units to 609 last week, oil services company Baker Hughes said. The number of gas rigs increased by the same number to 160.
Oil prices rose on Friday on optimism about demand prospects thanks to signals of increased energy consumption in China and data on a weaker-than-expected slowdown in U.S. GDP growth.
Trafigura Group, one of the biggest commodity traders in the world, sees “great upside” for the oil market, noting the release of pent-up demand following the lifting of quarantine restrictions in China.
The price of March futures for Brent on London’s ICE Futures Exchange stood at $87.83 a barrel by 7:15 a.m. Friday, up $0.36 (0.41%) from the previous session’s close. Those contracts rose $1.35 (1.6%) to $87.47 a barrel at the close of trading on Thursday.
The price of WTI futures for March increased by $0.33 (0.41%) to $81.34 per barrel at electronic auctions of New York Mercantile Exchange (NYMEX). By the close of previous trading the cost of those contracts rose by $0.86 (1.1%) to $81.01 a barrel.
U.S. statistics released Thursday showed that the U.S. economy remains accommodative despite a significant tightening of monetary policy by the Federal Reserve (Fed).
According to preliminary data from the Commerce Department, fourth-quarter GDP rose 2.9 percent on an annualized basis after climbing 3.2 percent in the previous quarter. The consensus analyst forecast cited by Trading Economics suggested that economic growth had weakened to 2.6%.
Oil prices are steadily rising in trading on Thursday after slight fluctuations the previous day, investors are evaluating the prospects for demand.
The opening of the Chinese economy gives the market reason to be optimistic about the recovery in consumption this year, writes Trading Economics.
The cost of March futures for Brent at London’s ICE Futures Exchange was $86.73 a barrel by 12:54 p.m., $0.61 (0.71%) above the index at the close of the previous session.
The price of WTI futures for March crude oil on the electronic trades of the New York Mercantile Exchange (NYMEX) makes $80.76 per barrel by that time, which is $0.61 (0.76%) higher than the final value of the previous session.
In addition, traders continue to assess data on fuel reserves in the U.S.
The country’s commercial oil reserves rose 533,000 barrels last week, according to a weekly report released by the Energy Department the day before. Growth in reserves was recorded for the fifth week in a row.
Gasoline inventories increased by 1.76 million barrels while distillates decreased by 507,000 barrels.
The experts interviewed by Bloomberg expected a 1.5 barrel growth of oil reserves, an increase of gasoline reserves by 1.5 million barrels and a 1.6 million barrel decline of distillate reserves.
Oil prices are declining slightly in trading on Tuesday, Brent remains near its highest since November last year, reached the day before.
The price of March futures for Brent at London’s ICE Futures Exchange stood at $88.14 a barrel by 12:49 p.m., down $0.05 (0.06%) from the close of the previous session.
The price of WTI futures for March at the electronic trading on the New York Mercantile Exchange (NYMEX) is $81.61 a barrel by that time, which is 1 cent lower than the final value of the previous session.
Oil prices were falling Monday amid low activity in the Asian session due to the long weekend in China in observance of the New Year according to the lunar calendar.
Hong Kong and Singapore markets are also closed.
The price of March futures for Brent crude oil on London’s ICE Futures Exchange stood at $87.35 per barrel by 7:15 a.m. Monday, up $0.28 (0.32%) from the close of the previous session. Those contracts rose $1.47 (1.7%) to $87.63 a barrel at the close of trading on Friday.
The price of WTI futures for March crude oil at electronic trades of NYMEX fell by that time by $0.23 (0.28%) to $81.41 per barrel. By closing of the previous session the cost of these contracts grew by $1.03 (1.3%) to $81.64 per barrel.
Brent gained 2.8% and WTI gained 1.8%.
Traders continue to assess the prospects for oil demand in China after the lifting of quarantine restrictions. During the holidays, which will last until the end of this week, many people travel, which should cause a significant increase in demand for fuel, and after the weekend experts expect an increase in industrial activity in China, said Bloomberg.
In addition, the market remains focused on the situation in Russia after the entry into force of the embargo on oil supplies from the country and the introduction by the G7 countries of a price ceiling in response to a full-scale war unleashed by Russia against Ukraine.
According to the International Energy Agency (IEA), the total volume of oil exports from Russia in December fell by 2.5% compared to November, to 7.8 million bpd, as crude supplies to the EU decreased.
Russian oil exports fell 6 percent last month to 4.7 million bpd, the lowest level last year. At the same time, petroleum product sales rose 3.3 percent to 3.1 million bpd.
According to the IEA forecast, by the end of the first quarter, Russian oil production will be about 1.6 mln bpd lower than before the Russian invasion of Ukraine.
