Rate rises, and global economic uncertainties lower oil prices.
Oil prices dipped on Monday as worries about increasing interest rates, the global economy, and gasoline consumption overshadowed OPEC+ supply restrictions.
By 0409 GMT, Brent crude was down 75 cents, or 0.92%, to $80.91, while U.S. West Texas Intermediate crude fell 74 cents, or 0.95%, to $77.13.
Both contracts fell more than 5% last week, their first weekly loss in five, as the U.S. indicated gasoline demand declined from a year earlier, raising concerns of a recession in the world’s largest oil consumer.
CMC Markets analyst Tina Teng said investors were wary of growth due to weak U.S. economic data and tech sector earnings. In addition, she said that the stabilizing U.S. currency and rising bond yields are pressuring commodity markets.
The U.S., U.K., and European central banks will likely hike interest rates in the first week of May to combat excessive inflation.
China’s economic recovery after COVID-19 obscured its oil consumption picture, but Chinese customs data revealed record levels in March. Russia and Saudi Arabia supplied 2 million bpd apiece to China.
“I would cite recent mixed economic data and continued central bank intervention as the primary drivers behind the recent price correction,” said JTD Energy Services director John Driscoll. He suggested many may see this as a dip-buying opportunity.
In June, Asia’s interest in Middle East supply loading diminished due to record production from China and India, lowering refining margins.
Analysts and traders were optimistic about China’s gasoline demand recovery in the second half of 2023 and OPEC+’s May supply curbs, which might tighten markets.
Analysts at the National Australia Bank predicted Brent might rise to $92 a barrel by the end of the second quarter due to China’s oil demand rebound, sanctions, and supply restrictions.
Baker Hughes Co (BKR.O) reported that US energy businesses added oil and natural gas rigs for the first time in four weeks last week.
Comment Template