Crude oil prices fell from the highest level in two weeks today, Thursday, March 3 (2023), after the rise in US inventories, which raises concerns about demand.
The markets had traded higher, in an attempt to extend the gains from the previous two sessions, amid indications of a strong economic recovery in China, the world’s largest oil importer.
Crude oil prices today
By 07:16 a.m. GMT (10:16 a.m. Mecca time), benchmark Brent crude futures – for May 2023 delivery – fell by 0.18%, to $84.16 a barrel.
The price of US West Texas crude futures – delivery in April 2023 – decreased by 0.23%, to $ 77.51 a barrel, according to data viewed by the specialized energy platform.
And crude oil prices ended their trading, yesterday, Wednesday, March 1, on the rise, to continue reaping gains for the second session in a row, recording the highest level in two weeks.
Oil market conditions
Data showed that manufacturing activity in China in February grew at the fastest pace in more than a decade, adding to evidence of an economic recovery in the world’s second-largest economy after easing coronavirus restrictions.
On the other hand, the tenth consecutive week of crude oil inventories build-up in the US capped the market’s gains.
And the Energy Information Administration reported that US oil inventories rose by 1.2 million barrels in the week ending February 24 to 480.2 million barrels, the highest level since May 2021.
Analysts polled by Reuters had expected an increase of 500,000 barrels.
However, record exports of US crude oil kept the increase lower than in recent weeks, with shipments rising to 5.6 million barrels per day last week, according to the Energy Information Agency.
demand for oil
Serena Huang, head of Asia Pacific analysis at analytics firm Vortexa, said gains in crude oil prices over the previous two sessions were also capped by looming uncertainty over the outlook for global aggregate demand, keeping prices “largely unchanged”. .
Expectations of a rate hike by the European Central Bank are rising after inflation in Germany, Europe’s largest economy, rose more than expected in February, with food and energy prices rising despite relief measures.
This comes after France and Spain, which are also major economies in Europe, recorded unexpected gains in inflation.
In the US, manufacturing contracted for the fourth consecutive month in February, although there were signs that factory activity was beginning to level off, with the measure of new orders falling from its lowest level in more than 2 and a half years.
Oil price forecast
“German inflation has raised concerns that the European Central Bank should be more aggressive, and US data also shows that the economy is still slowing but some parts are improving,” said Edward Moya, senior market analyst at OANDA, in a note.
He added, “It appears that crude oil prices will remain stuck in a limited trading range, but it is clear that the risks are to the upside.”
He noted that some traders may wait until they get a better idea of the peak rate after the non-farm payroll report next Friday.
Meanwhile, crude oil processed by Indian refineries reached record levels in January, interim government data showed on Wednesday, as the country boosted imports of Russian oil that Western countries shunned.
Refinery productivity in the world’s third-largest oil importer and consumer reached 5.39 million barrels per day for the month of January, the highest level since Reuters records dating back to 2009.
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