Crude oil prices fell, during today’s trading, Thursday, April 13 (2023), after two sessions of gains, amid fears of a decline in demand.
This comes as investors continue to worry about a possible recession in the United States and weak demand for oil, in conjunction with the disclosure of inflation data in America.
Crude oil prices today
By 07:58 AM GMT (10:58 AM Mecca time), Brent crude futures – for June 2023 delivery – were down 0.15%, recording $87.20 a barrel.
West Texas Intermediate crude futures – for May 2023 delivery – decreased by 0.08%, recording $ 83.19 a barrel, according to what was seen by the specialized energy platform.
And crude oil prices ended their dealings, yesterday, Wednesday, April 12, with an increase of more than 2%, to continue to reap gains for the second session in a row, after the release of US inventories data.
Oil price analysis
Crude oil prices rose to the highest level in more than a month in the previous session; Soft US inflation data spurred hopes that the Federal Reserve is likely to stop raising interest rates.
But the previous tightening, which raised interest rates to their highest levels since 2007, raised concerns that the Fed’s focus on stemming inflation could stifle economic growth and future oil demand in the world’s largest oil user.
“Talks about a possible US recession that were highlighted in the minutes of the recent Fed meeting continue to raise doubts about the outlook for oil demand, which has been nullified by the currently tighter supply conditions,” said market analyst at IG, Yip Jun Rong.
US consumer prices rose 0.1% last month, less than economists’ expectations for a 0.2% increase, and down from a 0.4% rise in February; This raised expectations that the Federal Reserve will stop raising interest rates after a possible increase in May.
Fed staff, assessing the potential fallout from banking stress, predicted a “moderate recession” later this year.
potential recession
“The rally in crude oil prices has ended due to concerns that a possible US recession will dampen demand for crude oil,” said Toshitaka Tazawa, an analyst at Fujitomi Securities Co., Ltd.
He added, “WTI rose above $83 a barrel, near its highest technical ceiling since last December, which also triggered a sense of caution among investors,” according to Reuters.
On Wednesday, markets shrugged off a slight increase in US oil inventories, attributing this in part to a congressional-mandated release of oil from the US emergency reserve and lower exports at the beginning of the month.
The Energy Information Administration said that crude inventories rose by 597,000 barrels last week, compared to analysts’ expectations in a Reuters poll, down by 600,000 barrels. Meanwhile, gasoline and distillate inventories were withdrawn less than expected.
strategic oil reserves
US Energy Secretary Jennifer Granholm said on Wednesday that the Biden administration plans to refill the US Strategic Oil Reserve soon, and hopes it will do so at lower crude prices.
However; The oil market was rocked two weeks ago after the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia agreed to cut production.
As a result, Fatih Birol, Executive Director of the International Energy Agency, said that the global oil market may witness a scarcity in the second half of 2023. Which may push prices up.
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