Crude oil prices fell, at the end of trading today, Friday, May 19 (2023), but achieved the first weekly gain in 5 weeks.
Crude prices had risen earlier in the day, as investors were cautiously optimistic about the fading risks of defaulting on US debt, but it seems that the results of the talks that Congress is conducting with the White House are not positive so far.
The Baker Hughes report showed that the number of oil rigs in the United States decreased by 11 rigs during the past week, bringing the total to 575 rigs.
Crude oil prices today
At the end of the session, benchmark Brent crude futures – for July 2023 delivery – fell 0.4%, to $76.55 a barrel.
West Texas Intermediate crude futures – for June 2023 delivery – also fell by 0.4%, to record a barrel of $71.55, according to information seen by the specialized energy platform.
Crude oil prices ended their trading, yesterday, Thursday, May 18, with a decline of more than 1%, amid fears of an economic recession that might affect demand.
During the week ending today, Brent and West Texas Intermediate crude prices achieved gains of about 1.9% and 2.2%, respectively, recording their first weekly rise in 5 weeks.
Oil price analysis
“I think the markets have been appreciating the risks of a US debt default, which translates into a more risky environment, and some lower buying in Brent crude from previous oversold conditions,” said market analyst at IG Yip Jun Rong.
Earlier this week, US President Joe Biden and House Speaker Kevin McCarthy reiterated their goal of reaching a deal to raise the $31.4 trillion federal debt ceiling, and agreed to speak as soon as Sunday.
“Once we get past the US debt ceiling issue, fundamentals may ultimately be more important to determine if any upward move can be sustained,” Yip said, according to Reuters.
interest rates
Sentiment remains mixed; Investors reconcile optimism about avoiding a US debt default with inflation data that may portend interest rate hikes from global central banks.
US inflation does not appear to be declining fast enough to allow the Federal Reserve to halt its campaign to raise interest rates, according to two federal policymakers.
Analysts from the National Australia Bank said the prospect of additional interest rate hikes added to concerns about weak demand in the US.
demand for oil
However, analysts said that there is an upside to crude oil prices; They expect Chinese demand to continue to improve throughout 2023, which should offset the slowdown in OECD demand.
Data showed, earlier this week, that the productivity of Chinese oil refineries in April rose by 18.9% from the previous year to the second highest level ever.
Chinese refineries maintained high operating rates to meet the recovering domestic demand for fuel and build up stocks ahead of the summer travel season.
Leave a Reply