Crude oil prices fell by more than 1% at the end of trading today, Wednesday, March 8 (2023), for the second session in a row, amid fears of an economic recession that may affect demand.
This comes at a time when data from the Energy Information Administration showed an unexpected drop in US crude oil inventories, after the market fell in the previous session, amid fears that larger increases in US interest rates would affect demand.
Crude oil prices today
At the end of the session, Brent crude futures prices – for May 2023 delivery – fell by 0.75%, to reach $82.66 a barrel.
The price of US West Texas crude futures – delivery in April 2023 – decreased by 1.2%, to $ 76.66 a barrel, according to data viewed by the specialized energy platform.
And crude oil prices ended their dealings, yesterday, Tuesday, March 7, with a decline of more than 3.5%, with increasing concerns about demand for crude, after the statements of the US Federal Reserve Chairman.
US oil stocks
Data from the Energy Information Administration showed that US crude oil inventories decreased by about 1.7 million barrels in the week ending March 3, contrary to analysts’ expectations.
The reduction defied expectations of nine analysts polled by Reuters regarding an increase of 400,000 barrels in crude stocks.
However, near-term drivers pointed to a more bearish outlook, as investors prepare for a sharp increase in US interest rates.
Oil price analysis
“Federal Reserve Chair Jerome Powell’s comments about ‘higher for longer’ interest rates spooked markets, sending risky assets, including commodities, plummeting overnight,” said CMC Markets analyst Tina Ting.
She indicated that the short rebound in crude oil prices today is due to profit-taking, as nothing has fundamentally changed,” according to Reuters.
Economic recession
Both Brent and WTI fell more than 3% on Tuesday, after US Federal Reserve Chairman Jerome Powell said the central bank would likely need to raise interest rates more than expected in response to the recent strong data.
“This raised concerns of weak demand in the US,” ANZ Research analysts said in a note to clients.
Powell’s comments pushed the US dollar, which trades inversely to crude oil prices, to a 3-month high against a basket of currencies.
The dollar index rose to 105.65, about 1.3%, on Tuesday, the highest level since December 6.
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