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 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 falling on Friday after rising to two-week highs in the previous session.
Brent crude futures on London’s ICE Futures exchange traded at 7:05 a.m. on Friday stood at $84.52 a barrel, down $0.23 (0.27%) from the previous session’s closing price. Those contracts rose $0.44 (0.5%) to $84.75 a barrel on Thursday.
The price of WTI April futures at electronic trades of NYMEX fell by $0.2 (0.26%) to $77.96 per barrel by that time. At the end of previous session the cost of contracts grew by $0.47 (0.6%) up to $78.16 per barrel.
Both Brent and WTI contracts finished the week with growth thanks to optimism caused by signals that activity is recovering in China, which outweighs concerns of traders related to the ongoing tightening of monetary policy in the USA.
The resilience of the U.S. economy and labor market in particular leaves the Federal Reserve (Fed) with room to maneuver for further rate hikes, and that supports the U.S. dollar, which in turn is a negative factor for commodity markets.
In addition to these two factors, traders are trying to assess the dynamics of Russian oil exports, which so far has remained more resilient than expected in the face of sanctions imposed on Russia, Bloomberg notes.
Oil continues to rise in price weakly on Thursday, after it rose in previous trading on fuel inventories data in the U.S.
The market is also supported by Russia’s plans to reduce oil production and exports, according to Trading Economics.
Brent crude futures on London’s ICE Futures Exchange rose $0.1 (0.12%) to $84.41 a barrel by 7:01 a.m. on May. On Wednesday those contracts grew by $0.86 (1%) to $84.31 per barrel.
WTI April futures price grew by $0.08 (0.10%) to $77.77 per barrel at electronic auctions of New York Mercantile Exchange (NYMEX) in the morning. According to results of previous trades the cost of contracts grew by $0.64 (0.8%) to $77.69.
Commercial oil inventories in the U.S. rose 1.17 million barrels last week to 480.21 million barrels, the Energy Department said Wednesday. Experts on average had expected an increase of 1.9 million barrels.
Stocks at the terminal in Cushing, which stores oil traded on the NYMEX, increased last week by 300,000 barrels.
Gasoline stocks declined by 874,000 barrels and distillates stocks increased by 179,000 barrels. Analysts forecasted a decrease in gasoline reserves by 1 million barrels and distillates by 500 thousand barrels.
Oil is getting cheaper on Monday after a strong growth in previous trading.
Data published in the U.S. on Friday pointed to the continuing high level of inflation in the country. This could prompt the Federal Reserve to raise interest rates to a greater extent, which will have a negative impact on the U.S. economy. A recession, in turn, would reduce demand for fuel, analysts said.
The quotations of April futures for Brent crude oil at London’s ICE Futures exchange fell by $0.29 (0.35%) to $82.87 per barrel by 6:59 a.m. on Tuesday. On Friday those contracts rose by $0.95 (1.2%) to $83.16 per barrel.
The price of WTI April futures on NYMEX fell by $0.2 per barrel to $76.12 in the morning. According to results of previous trades the cost of contracts grew by $0.93 (1.2%) to $76.32.
Brent added 0.2% and WTI 0.3% over the week.
The U.S. consumer price index (PCE) rose 0.6% in January from the previous month, the highest gain in six months, and rose 5.4% year over year, the Commerce Department said Friday. It was up 0.2% and 5.3% in December, respectively.
The PCE Core index, which excludes food and energy costs, rose 0.6% for the month (up 0.4% in December). In annual terms, the indicator, which the Federal Reserve closely monitors when assessing inflation risks, accelerated to 4.7% from 4.6% in December. At the same time analysts expected a less significant rise – by 0.4% and 4.3%, respectively.
