Oil fell by more than 4%
Oil prices fell sharply on Thursday under pressure from signals of weakening gasoline demand in the U.S.
The price of September futures for Brent crude oil on London’s ICE Futures Exchange was $102.29 per barrel on Thursday, down $4.63 (4.33%) from the close of the previous session.
At a certain point in trading, the price of Brent dropped more than 5% to $101.5 per barrel.
The price of WTI crude futures for September at the electronic trading on NYMEX by that time was $95.25 per barrel, which is $4.63 (4.64%) lower than the closing price of the previous session.
The day before the US Department of Energy’s report showed a 3.5 mn barrel increase in gasoline inventories last week to 228.4 million barrels. Meanwhile, average gasoline consumption in the United States over the past four weeks showed that the rise in fuel prices has limited consumption to the levels of two years ago, Bloomberg noted.
“Demand for gasoline in the U.S. is not very strong, even though it’s peak consumption season,” noted Zhaojin Futures Co. analyst Gao Jian. Gao Jian. — As the auto season ends soon and economic growth slows, the market should be aware that demand for petroleum products will decline.”
Oil prices have been under pressure since mid-June amid growing risks of a recession in the world economy due to monetary policy tightening by global central banks, writes Trading Economics.
Traders also keep an eye on the situation around the Nord Stream pipeline. The operator of the pipeline, Nord Stream AG said on Thursday that supplies of Russian gas through it resumed after technical works lasted since July 11.
Meanwhile, Britain decided to impose a ban on coal imports from Russia in August and on oil imports in late December, Downing Street reported Thursday. “An amendment is passed that bans imports of oil and petroleum products, coal and gold. It also prohibits direct or indirect purchases, shipments of these goods,” the clarification, published Thursday, said.
Analysts at U.S. bank Goldman Sachs revised its forecast on oil prices
Analysts at U.S. bank Goldman Sachs, one of the most optimistic forecasts about the cost of oil, changed its earlier forecast about the growth of oil prices to $100 in the next 12 months, Bloomberg said.
Now analysts predict that Brent crude oil will reach $94 per barrel in the next 12 months and $97 per barrel in the second half of 2024, the publication said.
The bank said oil prices have fallen despite rising demand in China, given pressure on the banking sector, recession fears and investor withdrawal.
“Historically, after such traumatic events, price adjustments and recoveries are only gradual,” the bank notes.
This week, the situation surrounding Swiss bank Credit Suisse triggered panic in the markets as oil plummeted to a 15-month low and Brent crude fell 12% to below $73 a barrel.
After the price decline, the bank expects OPEC producers to increase production only in the third quarter of 2024, contrary to Goldman’s forecast that it will happen in the second half of 2023. Analysts at the bank believe a barrel of Brent blend will reach $94 in the next 12 months and trade at $97 in the second half of 2024.
Bloomberg reported that the largest oil exporter, Saudi Arabia, announced higher April oil prices for markets in Asia and Europe.
Earlier, we reported that Iraq and OPEC advocated for guarantees of no fluctuations in oil prices.
Iraq and OPEC stood up for guarantees of no fluctuations in oil prices
Iraqi Prime Minister Mohammed al-Sudani and OPEC Secretary General Haysam al-Ghajs said coordination between oil-exporting countries is necessary to ensure that oil prices do not fluctuate in the market. the Iraqi government said in a statement on its website following the OPEC Secretary General’s visit to Baghdad.
“Oil-exporting countries need to coordinate their actions to avoid fluctuations in oil prices and their impact on both exporting and consuming countries,” the statement said.
Iraq is a founding member of the Organization of Petroleum Exporting Countries (OPEC). Also, Iraqi Oil Minister Hayyan Abdul Ghani said Sunday that the country intends to maintain the rate of oil production cuts of 220,000 barrels a day in line with its quota under the latest OPEC+ alliance agreement.
“We have committed some oil companies operating in the south to cut production to meet the agreed upon OPEC+ rates,” he said.
We previously reported that the price of Brent dropped below $75 per barrel for the first time in more than a year.
The price of Brent dropped below $75 per barrel for the first time in more than a year
The price of Brent dropped. Contracts for Brent crude oil to be delivered in May 2023 dipped below $75 per barrel in trading on March 15, Intercontinental Exchange data shows. Below that mark, the price fell for the first time in more than a year – since December 2021. At its lowest price, Brent was $74.04 per barrel, $3.41 (4.4%) less than at the close of trading on March 14 ($77.45 per barrel).
Brent is falling fast for the third day in a row. The price of fuel has fallen by $8.74 per barrel (10.56%) for three trading days: On March 10 trading ended at $82.78 per barrel, and on the weekend of March 11-12, the exchange was closed.
The turmoil affects the price of oil in the banking sector. Collapse of shares of Swiss bank Credit Suisse on the background of its problems and the refusal of the largest investor to inject new money worried world markets and overshadowed hopes for a recovery in oil demand in China, wrote Reuters. Also, three banks in the U.S. have gone bankrupt or closed since early March, including Silicon Valley Bank, which was the nation’s 16th-largest. It became the largest collapsed bank in the U.S. since the 2008 financial crisis. Investors fear a new crisis: The risk of a U.S. recession has intensified amid bank problems, Ole Hansen, head of commodity strategy at Saxo Bank, told Bloomberg.
A statement from the Saudi National Bank, which owns 9.9 percent of Credit Suisse, that it could not make new investments put an end to signs that Credit Suisse had just begun to stabilize, Reuters noted. “Fears of contagion [of the entire banking system] are gaining ground. As a result, the dollar is strengthening and securities are weakening – bad signs for oil,” said Tamas Varga, an analyst at oil brokerage PVM. “Credit Suisse and broader concerns about banks are negatively affecting sentiment. The outlook has suddenly become highly uncertain, and that’s hitting oil prices in the near-term,” said Craig Erlam, market analyst at brokerage OANDA.
The price of U.S. WTI crude fell below $69 a barrel: that hasn’t happened since late 2021 either, Bloomberg noted. The International Energy Agency also took a pessimistic stance in its monthly report and predicted that global oil supply will “comfortably” exceed demand in the first half of 2023, the agency wrote. There are growing concerns that more than 10 years of “easy money” with a sharp increase in key rates at the end “will not end well,” Bjarne Schildrup, senior natural resources analyst at SEB AB, told Bloomberg.
Earlier we reported that oil prices accelerated their fall, continuing the trend from the beginning of the week.
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