Crude oil prices rose marginally, during today’s trading, Monday, April 17 (2023), amid expectations of an increase in demand and a decline in supplies.
This comes with the support of OPEC + plans to cut more production, and investors looked forward to Chinese economic data in search of signs of recovery in demand in the second largest oil consumer in the world.
Crude oil prices today
By 07:52 AM GMT (10:52 AM Mecca time), Brent crude futures for June 2023 delivery rose 0.06%, recording $86.36 a barrel.
West Texas Intermediate crude futures – delivery in May 2023 – increased by 0.07%, recording $ 82.58 a barrel, according to what was seen by the specialized energy platform.
And crude oil prices ended their trading, on Friday, April 14, on the rise, amid expectations of a recovery in demand in China with declining supplies, to achieve weekly gains for the fourth time in a row.
WTI crude gained 2.3% for the week, while Brent crude rose 1.4%.
Oil price analysis
During the past week, crude oil prices achieved weekly gains for the fourth time in a row – the longest consecutive streak since mid-2022 – after the International Energy Agency expected record demand in 2023 amounting to 101.9 million barrels per day, an increase of two million barrels per day from last year. .
However, the International Energy Agency warned, in its monthly report, that the production cuts announced by OPEC + producers threaten to exacerbate the oil supply deficit expected in the second half of the year and could harm consumers and the recovery of the global economy.
Rising costs of Middle East crude supplies, which meet more than half of demand in Asia, are already squeezing refinery margins; This prompted it to secure supplies from other regions.
Refineries are also ramping up gasoline production ahead of peak summer demand, while cutting diesel production amid deteriorating profit margins.
demand for oil
“While fixed price and time spreads on expectations reinforce tight supplies in the market, demand concerns remain,” ING analysts said in a note.
They added, “Weak refinery margins continue to be a feature, with weakness predominately in middle distillates, as high crude oil prices will not help refinery margins either.”
Meanwhile, oil exports from northern Iraq to the Turkish port of Ceyhan remained suspended, nearly 3 weeks after an arbitration case ruled that Ankara owes Baghdad compensation for unauthorized exports.
US interest rates
CMC Markets analyst Tina Ting said that investors will be watching the release of Chinese GDP data for the first quarter this week, which is expected to be positive for commodity prices.
She added that US corporate earnings could provide clues to the path of Federal Reserve policy and the path of the dollar, according to Reuters.
The dollar was strengthening along with the interest rate hikes; This makes oil denominated in the US currency more expensive for holders of other currencies.
Traders are betting that the Fed will raise the lending rate in May by another quarter of a percentage point and push expectations for a rate cut into later this year, as it usually does in a slowdown.
IG analyst Tony Sycamore said the market was pricing in a 78% chance of a 25bp rate hike in May, with less than 60bp of cuts being priced in by the end of the year.
“This means that some of the tailwinds supporting crude oil demand from expectations of Fed rate cuts are starting to fade,” he added.
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