Oil prices rose, at the end of trading today, Thursday, June 29 (2023), with optimism about the demand for crude, after the decline in US inventories.
Crude prices fell in early trading, amid fears of rising interest rates that would dampen economic growth and global demand for fuel, and weak economic data from China affected sentiment.
Oil prices are facing wild fluctuations between fears of economic recession; This may weaken demand, at a time when many international institutions indicate an increase in demand during the second half of this year, and a noticeable shortage in supplies.
Oil prices today
At the end of the session, Brent crude futures – August 2023 delivery – increased by 0.4%, to record the price of a barrel of oil at about $74.34.
US West Texas Intermediate crude futures – August 2023 delivery – rose 0.4%, to $69.86 a barrel, according to figures seen by the specialized energy platform.
And oil prices ended their dealings, yesterday, Wednesday, June 28, with an increase of about 3%, with a noticeable decrease in US inventories, supported by hopes for a recovery in demand.
US oil stocks
Oil prices received support, during the previous session, from a decline in US oil inventories, after the Energy Information Administration said that crude stocks fell by 9.6 million barrels in the week ending June 23, far exceeding the drawdown of 1.8 million barrels that analysts expected in a poll. Reuters.
“The market has turned around due to renewed concerns about increasing interest rates in the United States and Europe, which will reduce global demand for oil,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.
The leaders of the world’s major central banks confirmed on Wednesday that they believe further policy tightening will be necessary to tame stubbornly high inflation, but they still believe they can achieve this without triggering a recession.
US Federal Reserve Chairman Jerome Powell did not rule out further increases at the next central bank meeting, while European Central Bank President Christine Lagarde reinforced expectations that interest rates would rise in the euro zone for the ninth time in a row next July.
demand for oil
Adding pressure to oil prices, annual profits at industrial firms in China, the world’s second-largest oil consumer, increased from a double-digit decline in the first five months; Falling demand has squeezed profit margins.
“It may be that the impact of the spread of electric vehicles and improvements in energy efficiency in many industries to address climate change is beginning to affect the underlying demand structure itself,” said Tetsuo Emori, CEO of Emory Fund Management.
In order to stabilize oil markets, Saudi Arabia pledged this month to reduce its production by about one million barrels more in July, in addition to extending the broader OPEC + agreement to limit supplies until 2024.
Last week, US energy companies reduced the number of operating oil and natural gas platforms, for the eighth week in a row, for the first time since July 2020.
Brent’s 6-month default – a price structure in which spot-load contracts trade at higher prices than later-load contracts – is at its lowest level since December, but still points to higher demand for spot delivery.
Kikukawa said: “Behind this decline is the expectation that immediate demand for fuel will remain stable as the United States enters the driving season, but the global economy will slow towards the second half of this year, which reduces demand for oil.”
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