Oil prices are falling… and Brent crude is near $76

Oil prices are falling… and Brent crude is near $76

Oil prices fell, during today’s trading, Thursday, March 23, 2023, after 3 sessions of gains.

This comes after Federal Reserve Chairman Jerome Powell highlighted the credit risks in the banking sector of the largest economy in the world, in conjunction with the rise in US oil stocks more than expected.

The US Federal Reserve decided to raise interest rates by 25 basis points, for the ninth time in a row, but hinted that the monetary tightening cycle is nearing the end.

Crude oil prices today

By 08:06 a.m. GMT (11:06 a.m. Mecca time), the prices of benchmark Brent crude futures – for May 2023 delivery – fell by 0.68%, to reach $ 76.17 a barrel.

The price of US West Texas crude futures – delivery in May 2023 – decreased by 0.80%, to $ 70.31 a barrel, according to data viewed by the specialized energy platform.

Crude oil prices ended their trading, yesterday, Wednesday, March 22, with an increase of about 2%, with the decline of the US dollar.

Oil market conditions

Powell said on Wednesday that stresses in the banking industry could lead to credit risks, with “significant” implications for the economy, which US central bank officials expect to slow more this year than previously thought.

Oil prices
Oil tanks – archives

“Economic risks were identified at the Fed meeting, while higher-than-expected US oil inventories also dampened some optimism about the demand outlook,” said IG’s market strategist, Yip Kun Rong.

Yesterday, Wednesday, the two benchmarks for oil settled at their highest closing since March 14, after the dollar fell to its lowest level in 6 weeks.

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“However, the dollar’s weakness has been a bright spot in promoting some flexibility in oil prices,” adds Yip Jun Rong, noting that there is still room to upside in crude oil prices.

demand for oil

Prospects for demand recovery in China, the world’s largest crude importer, could keep crude prices supported.

Goldman Sachs said today, Thursday, that Chinese demand continued to rise across the commodity complex; The demand for oil exceeded 16 million barrels per day.

Consulting firm Wood Mackenzie said that China is expected to account for about 40% of the increase in global oil demand this year, after easing the measures imposed to confront the Corona virus.

US oil stocks

Meanwhile, the latest data from the Energy Information Administration showed that US crude oil inventories unexpectedly rose last week to their highest levels in nearly two years.

In the week ending March 17, crude inventories rose by 1.1 million barrels to 481.2 million barrels, the highest level since May 2021.

The increase contradicts the expectations of analysts – in a Reuters poll – a decline of 1.6 million barrels.

Citi analysts said, in a weekly report: “Despite all the negative talk about the expectations of oil production growth in the United States for the year 2023, the exaggeration of cost inflation and the decline in capital expenditures, the latest weekly report of the Energy Information Administration confirms the pivotal role of US oil in global oil markets.” .

Analysts added, citing EIA data, that total US exports of crude oil and petroleum products reached a new level just shy of 12 million barrels per day, far higher than supply levels in any other country.

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