The price of a barrel of oil declined globally by more than 4%, at the end of trading today, Monday, June 12 (2023), for the third session in a row, amid fears of a decline in demand due to the increase in interest rates in many countries; This indicates a high rate of inflation and warns of a global economic recession.
This comes amid investors’ anticipation of the results of the US Federal Reserve meeting, during the current week. To learn about the expectations of increasing interest rates during the coming times.
Concerns about the growth of fuel demand in China and the increase in the supply of Russian crude also affected the price of a barrel of oil globally.
The global price of a barrel of oil today
At the end of the session, the price of benchmark Brent crude futures – August 2023 delivery – fell by 3.9%, to $71.84 a barrel.
Meanwhile, US West Texas Intermediate crude futures – for July 2023 delivery – fell by 4.4%, to $67.12 a barrel, according to figures seen by the specialized energy platform.
The global price of a barrel of oil fell by more than 1.5%, at the end of trading on Friday, June 9 (2023), after a volatile session, to continue its decline for the second day in a row; What prompted him to record the second weekly loss.
Oil price analysis
Disappointing Chinese economic data raised concerns about demand growth in the world’s largest crude importer; This offset the rise in oil prices supported by Saudi Arabia’s decision to cut production by 1 million barrels per day in July.
“The price of a barrel of oil globally is stuck in a clash between two opposing forces, downward expectations for fear of monetary deflation and bullish speculators who expect inventories to decline in the second half of 2023,” said Francisco Blanch, an analyst from Bank of America Global Research, Bank of America Global Research.
“The bears will retain control for the time being, as oil prices struggle to rise until the Federal Reserve eases its tightening in interest rate hikes,” Blanche added.
Bank of America Global Research still expects Brent crude to average around $80 per barrel in 2023.
interest rates
Interest rate hikes by the Federal Reserve boosted the dollar index; This made dollar-denominated commodities more expensive for holders of other currencies and affected prices.
Most market participants expect the US central bank to leave interest rates unchanged when it concludes its two-day monetary policy meeting next Wednesday.
Suganda Sachdeva, CEO, Chief Equity, Currency and Commodity Strategist at ACMC Investments, said: “All eyes are now focused on two major factors that will affect the direction of the price of a barrel of oil globally; firstly, the US inflation reading due on Tuesday will be closely analyzed by market participants to look for clues about the general economic climate.
Sachdeva added: “Secondly, the outlook for the Federal Reserve’s policy for next year will direct the course of oil prices,” according to Reuters news agency.
Global oil price forecasts
On the supply front, Blanche said that while Saudi Arabia cut oil production 4 times last year; The Russian supplies did not decline with the sanctions in a way that had less impact on production.
Russian oil exports to China and India grew despite the implementation of the EU embargo and the G7 price cap mechanism that began in early December.
Goldman Sachs lowered its forecast for the price of a barrel of oil globally due to higher than expected supplies from Russia and Iran and raised the supply forecast for 2024 for producers and Venezuela; With a total of 800 thousand barrels per day.
The bank’s forecast for the price of crude oil by the end of December 2023 is $86 per barrel for Brent, down from $95, and $81 per barrel for WTI, down from $89.
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