Crude oil prices fell, during today’s trading, Monday, March 6 (2023), amid fears of a decline in demand.
This comes after China set a lower-than-expected target for economic growth this year at 5%, and as investors cautiously await testimony from US Federal Reserve Chairman Jerome Powell this week.
Crude oil prices today
By 07:46 a.m. GMT (10:46 a.m. Mecca time), the price of benchmark Brent crude futures – for May 2023 delivery – fell by 0.44%, to reach $85.45 a barrel.
The price of US West Texas crude futures – delivery in April 2023 – decreased by 0.41%, to $ 79.35 a barrel, according to data viewed by the specialized energy platform.
Crude oil prices ended their trading, on Friday, March 3, with an increase of about 2%, achieving weekly gains.
Oil market conditions
“Crude oil remains in a tug-of-war between optimism about China’s reopening and nervousness from an aggressive Federal Reserve hurting the US economy,” said Vandana Hari, founder of the Energy Markets Center Vanda Insights.
China’s closely watched growth forecast, announced on Sunday, was lower than last year’s 5.5% GDP growth target; Last year, GDP grew by just 3%.
Political sources told Reuters that a range as high as 6% could be set for 2023.
On Sunday, Chinese Premier Li Keqiang stressed that the foundation of stable growth in China needs to be strengthened; Insufficient demand remains an obvious problem, and the expectations of investors and private companies are unstable.
However, analysts at investment bank UBS raised their forecasts for Chinese GDP growth to 5.4% for 2023, and to 5.2% for 2024, from 4.9% and 4.8%, respectively.
“The economic reopening is proceeding better than we previously expected, as the feared second wave of Corona did not materialize, and there were few indications of supply disruptions,” said Tao Wang, head of China economic research at UBS Investments.
interest rates
At the same time, crude oil prices are likely to be affected by interest rate hikes around the world; The global central banks are tightening policy due to fears of increasing inflation.
Traders are beginning to take price increases into account around the world, but they are hoping for smaller increases than last year.
US Federal Reserve Chairman Jerome Powell will testify before Congress on Tuesday and Wednesday; He is likely to be questioned about whether a larger increase is needed in the world’s largest oil consumer.
Future increases in interest rates in the US are also likely to depend on the release of the February jobs report due on Friday, followed by the February inflation report due next week.
Over the weekend, European Central Bank President Christine Lagarde said it was “highly likely” that they would raise interest rates this month; to reduce inflation.
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