Oil quotes continued to decline
2023.01.04 08:46
Oil quotes continued to decline
Budrigannews.com – Concerns about weak demand as a result of the state of the global economy and China’s rising COVID cases weighed heavily on Wednesday’s sharp drop in oil prices.
By 1309 GMT, futures were down 2.9% to $79.71 a barrel, or $2.39. dropped to $74.73 per barrel by $2.20, or 2.9%.
On Tuesday, both benchmarks fell more than 4%, with Brent experiencing its largest single-day loss in more than three months.
Stephen Brennock, an analyst at PVM Oil, stated, “Worries about the state of the global economy are front and center of traders’ minds and will remain so for the foreseeable future.”
In anticipation of weak domestic demand, the Chinese government also increased export quotas for refined oil products in the first batch for 2023.
After being set at a 10-month low this month, top oil exporter Saudi Arabia may further reduce prices for its flagship Arab Light crude grade to Asia in February as concerns about oversupply continued to cloud the market.
The head of the International Monetary Fund issued a warning that the main engines of global growth—the United States, Europe, and China—were all experiencing declining activity, indicating that a significant portion of the global economy would experience a challenging year in 2023.
After four increases of 75 bps each, the Fed also increased interest rates by 50 bps in December. The economy may slow and fuel consumption may be hampered if the Fed increases its rate hikes.
The dollar fell on Wednesday after making significant gains in the previous session, lending oil some support. Oil demand typically rises when the dollar weakens because commodities denominated in the dollar become less expensive for holders of other currencies.
A preliminary Reuters poll found on Monday that U.S. distillate inventories were expected to decrease while crude oil inventories were likely to rise by 2.2 million barrels.
On Wednesday, at 4.30 p.m. EDT (20.30 GMT), the American Petroleum Institute, an industry group, is scheduled to release data on U.S. crude inventories. At 10.30 a.m. (1430 GMT) on Thursday, the Energy Information Administration, the United States Department of Energy’s statistical arm, will release its own figures.
In 2023, Bank UBS anticipates that Brent prices will reach $110 per barrel and WTI prices will reach $107.
More Gold is growing amid fears of global recession
