Oil prices are falling on Thursday after a strong rise in the previous session.
The cost of July futures for Brent on London’s ICE Futures Exchange stood at $76.73 a barrel by 8:15 a.m. Thursday, down $0.23 (0.3%) from the close of the previous session. Those contracts rose $2.05 (2.7%) to $76.96 a barrel on Wednesday.
The price of WTI futures for June oil fell by $0.23 (0.32%) to $72.6 per barrel at electronic auctions of New York Mercantile Exchange (NYMEX) by that time. The contract value grew by $1.97 (2.8%) to $72.83 per barrel at the end of previous session.
Support to the market on Wednesday was given by the statements of U.S. President Joe Biden, who again expressed optimism about negotiations on the state debt ceiling issue, notes Market Watch.
“I am confident that we will have an agreement and the U.S. will not default,” Biden said while speaking at the White House.
“Investors’ hopes that the U.S. government debt limit problem will be resolved soon are increasing,” notes StoneX analyst Fawad Razakzada. – Biden’s statement led to an increase in appetite for risk in world markets, including oil”.
However, the market was constrained by the U.S. Department of Energy data which showed an increase in oil inventories in the country for the second week in a row.
Last week commercial inventories in the U.S. rose by 5.04 million barrels, a record high over the past 12 weeks. Analysts had expected a decline of 2 million barrels.
Gasoline inventories declined by 1.38 million barrels, while distillate stocks increased by 80,000 barrels. Experts forecasted reduction by 2 million barrels and 1.5 million barrels respectively.
Oil prices continue to decline Wednesday morning after ending the previous session in the negative.
The price of July futures for Brent on London’s ICE Futures Exchange stood at $74.88 a barrel by 8:08 a.m., down $0.03 (0.04%) from the close of the previous session. Those contracts fell $0.32 (0.4%) to $74.91 a barrel on Monday.
The price of WTI futures for June crude oil at NYMEX fell by $0.07, to $70.79 per barrel. The day before contract prices dropped $0.25 (0.4%) to $70.86 per barrel.
The market participants are waiting for data on fuel reserves in the USA for the week that ended on May 12. They forecast a decrease of oil reserves by 0.9-1.3 mln barrels. The Energy Department will publish the official statistics at 5:30 p.m. Wednesday. According to the American Petroleum Institute (API), reserves rose by about 3.7 million barrels.
Earlier, U.S. Energy Secretary Jennifer Granholm said the country intends to start adding to its Strategic Petroleum Reserve (SPR) next month. According to Price Futures Group analyst Phil Flynn, such a move would likely consolidate support for quotations at $70 a barrel, the target price for the US.
In addition, restocking the U.S. will try to “calm down” Saudi Arabia, which, apparently, was dissatisfied with the lack of buying activity from Washington at a time when “the massive outflow of funds from bank deposits gave it a chance,” quoted Flynn to MarketWatch.
Oil quotes are declining in the afternoon on Thursday. The market is assessing the monetary policy of the Bank of England, data on inflation and oil imports in China and waiting for the monthly OPEC report.
The price of July Brent futures on London’s ICE Futures Exchange stands at $76.25 a barrel by 2:25 p.m., down $0.16 (0.21%) from the previous session’s closing price.
The price of futures on WTI crude oil for June on electronic trade of the New York Mercantile Exchange (NYMEX) fell by that time by $0.19 (0.26%), to $72.37 per barrel.
The rate of consumer price growth in China slowed to a 0.1% annualized rate in April from 0.7% in March, data from the State Statistics Office showed. April inflation is the lowest since February 2021. Analysts on average had forecast it would weaken to 0.4%, Trading Economics noted.
In addition, China reduced oil imports in April by 16% year-on-year to 10.6 million barrels per day, adding to fears of a slowdown in its economy.
Traders may also react to the outcome of the Bank of England meeting, which raised the benchmark interest rate by 25 basis points to 4.5% per annum.
The oil market has shown itself to be a “lightning rod for volatility” of late, notes KCM Trade Senior Market Analyst Tim Waterer, whose words are quoted by MarketWatch. In his opinion, extreme price fluctuations cannot be ruled out in this regard, especially given the high sensitivity of oil prices to expectations for global economic growth.
Oil prices continue to fall on Wednesday evening after the release of data on oil inventories and inflation in the United States.
The price of July Brent futures on London’s ICE Futures exchange stands at $76.19 a barrel by 5:54 p.m. on Wednesday, down $1.25 (1.61%) from the previous session’s closing price.
The price of WTI crude futures for June trading on the New York Mercantile Exchange (NYMEX) was down $1.41 (1.91%) to $72.3 a barrel by that time.
U.S. commercial oil inventories rose 2.95 million barrels to 462.58 million last week, according to a weekly report from the nation’s Energy Department. Experts had expected a 2.5 million-barrel drop in inventories.
“Downside risks to liquid fuel demand growth will be present through the end of 2024, but we expect seasonal increases in oil consumption and OPEC production cuts to put some upward pressure on oil prices in the coming months,” the U.S. Department of Energy’s Energy Information Administration (EIA) noted.
Consumer prices in the U.S. rose 4.9% in April compared to the same month last year, according to Labor Department statistics. The consensus forecast cited by Trading Economics assumed inflation at 5 percent, the same as in March.
Inflation is a key indicator that markets watch because it plays an important role in the Federal Reserve’s monetary policy decisions.
Oil prices rose on Friday despite concerns about the global economy and demand for energy resources after a rate hike in the U.S. and euro zone.
July Brent futures on London’s ICE Futures exchange stood at $73.21 a barrel by 8:04 a.m. Friday, up $0.71 (0.98%) from the previous session’s closing price. Those contracts rose $0.17 (0.2%) to $72.5 a barrel on Thursday.
The price of WTI futures for June oil grew by $0.63 (0.92%) up to $69.19 per barrel at electronic trades of NYMEX by that time. At the end of previous session the contracts went down by $0.04 (0.1%) to $68.56 per barrel, which was the lowest since March 20.
The day before, the European Central Bank expectedly raised all three key interest rates by 25 basis points (bps). Thus, the benchmark interest rate on loans now stands at 3.75%, the deposit rate at 3.25% and the rate on margin loans at 4%.
On Wednesday, the U.S. Federal Reserve also raised its key interest rate by 25 bps, its range now being the highest since 2007 at 5-5.25% per year. Meanwhile, the words about the necessity to further tighten the monetary policy disappeared from the press release on the results of the meeting.
In addition, it became known that Saudi Arabia in June will raise the price of oil with delivery to European countries, and for Asian buyers the fuel will become cheaper. Prices for oil with delivery in the U.S. next month will not change, with the exception of grade Arab Light, which will become cheaper by $0.5 per barrel, said state company Saudi Aramco.
Oil prices of benchmark grades declined again on Monday.
Quotes rose on Friday, but at the end of the week they fell by more than 5%.
Traders are concerned 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, Trading Economics said.
These factors more than offset optimism about China’s economic recovery after the lifting of strict restrictions imposed to curb the COVID-19 pandemic in late 2022, writes MarketWatch.
Amid a deteriorating economic backdrop and still hawkish behavior by the Federal Reserve, there are no real positive reasons for oil market growth, analysts believe Sevens Report Research
Brent June futures on London’s ICE Futures exchange stood at $80.53 per barrel by 8:05 a.m., down $1.13 (1.4%) from the close of the previous session. Those contracts rose $0.56 (0.7%) to $81.66 per barrel on Friday.
Price of futures on WTI crude oil for June at electronic trades of New York Mercantile Exchange (NYMEX) fell in the morning by $0.93 (1.2%) – down to $76.94 per barrel. At the end of previous session the cost of contracts rose by $0.5, or 0.7%, to $77.87 per barrel.
Last week the Brent quotations fell by 5.4% and WTI – by 5.5%.
