The global price of a barrel of oil decreased by more than 3% at the close of trading today, Wednesday, February 1 (2023), with the release of US inventories and the decision of the OPEC + coalition.
Oil prices rose in early trading, after data showed signs of slowing inflation in the United States, easing fears that the world’s largest oil user could face a recession due to further interest rate increases.
In a related context, the US Federal Reserve raised interest rates by 25 basis points, to reach the range of 4.5% and 4.75%.
The global price of a barrel of oil today
At the end of the session, futures prices for Brent benchmark crude – delivery in April 2023 – fell by 3.1%, to reach $82.84 a barrel.
The price of US West Texas crude futures – for March 2023 delivery – fell by 3.1%, to $76.41 a barrel, according to data seen by the specialized energy platform.
And oil prices ended their dealings yesterday, Tuesday, January 31, with an increase of more than 1%, amid anticipation of the position of central banks regarding raising interest rates, but they recorded monthly losses.
During January 2023, both crudes (Brent and West Texas Intermediate) recorded monthly losses of about 1.6% and 1.7%, respectively.
Oil market conditions
“Sentiment has shifted amid a positive corporate reporting season, and signs of slowing inflation have also fueled expectations that the Fed will be able to pause rate hikes,” ANZ commodities analyst said in a note.
Expectations of a slowdown in interest rate hikes helped lower the dollar index, which supported the price of a barrel of oil globally, as a weaker dollar makes the commodity cheaper for buyers holding other currencies.
An oil market expert, Suganda Sachdeva, had explained: “It seems that the global price of a barrel of oil is poised to go through a period of increased volatility..OPEC + is likely to adhere to its current production targets, however, Russia tends to increase oil exports to Asian buyers at deep discounts. This could upset the balance in the oil markets.
Sachdeva added that the global growth forecast developed by the International Monetary Fund and the expectation of strong pent-up demand from China amid increased traffic are supporting oil prices.
OPEC+ meeting
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as the OPEC+ alliance, kept the oil production policy unchanged, which requires a supply cut of two million barrels per day from November 2022 until December 2023.
A Reuters survey found that OPEC oil production fell in January, with Iraqi exports falling and Nigerian production not recovering.
OPEC members pumped 920,000 barrels per day less than the group’s target volumes under the OPEC+ agreement, and the shortfall was greater than the 780,000 barrels per day deficit in December.
US oil stocks
Separately, US Energy Information Administration data showed that US crude oil inventories rose by 4.1 million barrels in the week ending January 27.
This was a larger increase than the 400,000-barrel increase expected by analysts polled by Reuters on average.
Distillate stocks, which include diesel and heating oil, rose by about 2.3 million barrels, and gasoline stocks increased by 2.6 million barrels.
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