Crude oil prices fell by more than 1% at the end of trading today, Thursday, March 9 (2023), after a volatile session, amid fears of an economic recession that threatens demand.
The markets had started the morning trading on the upside, supported by the larger-than-expected drawdown in US oil inventories and hopes on demand in China.
Market conditions were dominated by fears that sharp increases in US interest rates would slow economic growth. Crude oil prices have fallen again.
Crude oil prices today
At the end of the session, futures prices for Brent benchmark crude – delivery in May 2023 – fell by about 1.3%, to reach $81.59 a barrel.
The price of US West Texas crude futures – for April 2023 delivery – fell by 1.2%, to $75.72 a barrel, according to data seen by the specialized energy platform.
And crude oil prices ended their trading, yesterday, Wednesday, March 8, with a decline of more than 1%, for the second session in a row, amid fears of an economic recession that might affect demand.
Oil price analysis
Oil prices posted their biggest daily decline since early January on Tuesday, after US Federal Reserve Chairman Jerome Powell said the central bank would likely need to raise interest rates more than expected in response to the recent strong data.
The two benchmarks (Brent and West Texas Intermediate) fell between 4% and 5% over the past two days, according to data seen by the specialized energy platform.
“Crude oil prices are still under the influence of Powell’s hawkish tone recently, increasing the possibility of another 50 basis point increase instead of the one 25 basis point,” said Suvru Sarkar, senior energy analyst at DBS Bank.
He noted that crude oil prices will be caught in a tug-of-war between sentiment surrounding rate hikes and inflation targeting on the one hand, and China’s reopening on the other for much of the year, at least in the first half.
demand for oil
While China’s imports of crude oil fell 1.3% in the first two months of 2023 from a year earlier, analysts pointed to an acceleration in imports in February as evidence of a recovery in fuel demand after Beijing lifted coronavirus controls.
The Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC) Haitham Al-Ghais said, at the CERA week held in Houston, on Tuesday, that China’s oil demand will rise between 500 thousand and 600 thousand barrels per day in 2023, and that the organization is “very optimistic, cautiously.”
Meanwhile, data from the US Energy Information Administration showed, on Wednesday, that US oil inventories fell by 1.7 million barrels last week, defying analysts’ expectations for an increase of 395 thousand barrels and ending a series of stock increases that lasted 10 weeks.
Adding to demand concerns, however, US gasoline stocks fell by 1.1 million barrels, according to official data, less than the forecast of 1.9 million barrels of withdrawal analysts, and distillate stocks grew by 138 thousand barrels, compared to expectations for a decline of 1 million barrels.
OANDA senior analyst Edward Moya said in a note that despite the EIA inventory report showing the first draws of crude this year; Uncertainty about crude demand in the short term “keeps crude oil prices under pressure.”
He added, “Until we see clear signs of China’s recovery, oil prices seem to be moving in a sideways direction,” according to Reuters.
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