Crude oil prices fell by about 4% at the end of trading today, Wednesday, April 26 (2023), to continue bleeding losses after falling by more than 2% during the previous session, with concerns about demand.
This comes as the market evaluated the weak US data that raised fears of a recession in the world’s largest country, despite the decline in US oil inventories last week.
Crude oil prices have given up all the gains they made since the 9 OPEC+ countries, led by Saudi Arabia, announced in early April a voluntary production cut from May until the end of this year.
Crude oil prices today
At the end of the session, benchmark Brent crude futures – for June 2023 delivery – fell by 3.8%, to $77.69 a barrel.
West Texas Intermediate crude futures – for June 2023 delivery – fell 3.6%, to $ 74.30 a barrel, according to what was seen by the specialized energy platform.
Crude oil prices ended their trading, yesterday, Tuesday, April 25, down by more than 2%, after two sessions of gains.
Oil price analysis
Russian Deputy Prime Minister Alexander Novak said today, Wednesday, that OPEC + remains an effective tool for coordination in global oil markets.
Crude oil prices fell more than 2% on Tuesday amid persistent economic concerns and expectations of higher interest rates that could curb fuel demand growth and counter signs of improving consumption gains in the short term.
“This data will add credence to claims that the US economy is approaching recession,” said PVM Oil analyst Stephen Brennock.
Investors also expressed concern that potential interest rate increases by central banks fighting inflation could slow economic growth and affect energy demand in the United States, Britain and the European Union.
US oil stocks
US crude oil inventories fell by about 5.1 million barrels in the week ending April 21, according to the Energy Information Administration.
Analysts had expected a decrease in US oil stocks by about 1.5 million barrels, according to Reuters.
As gasoline inventories fell by 2.4 million barrels last week, distillate inventories fell by 0.6 million barrels.
Crude oil inventories have been declining in the US since mid-March, as refineries ramped up operations to produce more gasoline ahead of the summer peak demand period that begins in May.
This pushed back WTI futures prices, when spot futures contracts are higher than later dated futures contracts, reflecting higher demand for the fuel.
“The decline in futures prices is in line with strong utilization rates, as refineries are now refining more crude oil in – and with – increasing demand for gasoline,” oil analyst Stephen Schork said in his newsletter.
Oil market conditions
China Galaxy Futures analyst Song Yang said the upward momentum generated by the OPEC cuts is running out, and Russia’s oil exports did not show any obvious decline, leaving the supply side without further support.
While data from the American Petroleum Institute pushed the market higher in early trading on Wednesday, persistent economic concerns and expectations of higher interest rates that may limit fuel demand growth contradict signs of improving consumption gains in the short term.
US consumer confidence fell to a 9-month low in April as concerns about the future escalated, raising the risk of the economy falling into a recession this year.
Investors also expressed concern that possible new interest rate increases by central banks fighting inflation could slow economic growth and weaken energy demand in the United States, Britain and the European Union.
The US Federal Reserve, the Bank of England and the European Central Bank are expected to raise interest rates at their next meetings.
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