Oil moved to decline due to weak demand
2023.01.10 02:29
Oil moved to decline due to weak demand
By Kristina Sobol
Budrigannews.com – On expectations that further interest rate increases in the United States, the world’s largest oil user, will slow economic growth and limit fuel demand, oil edged lower on Tuesday.
By 05:22 GMT, March delivery futures had dropped 0.5 percent to $79.22 a barrel, or 43 cents. West Texas Intermediate crude in the United States decreased by 0.5% to $74.27 per barrel, or 36 cents.
After China, the world’s largest oil importer and second-largest consumer, opened its borders over the weekend for the first time in three years, both benchmarks increased by 1% on Monday.
This week, two officials from the Federal Reserve of the United States said that in order to bring inflation rates down, the Fed’s policy rate, which is currently between 4.25 and 4.5 percent, would need to rise to between 5 and 5.25%.
Yeap Jun Rong, a Market Analyst at IG, wrote in a note that “(the expectation) is more hawkish than what markets are pricing at the moment (4.75-5% range).” He added that the Fed chair’s speech later on Tuesday could mirror the hawkish tone with some pushback as well.
According to Fed officials, new inflation data that will be available later this week will assist them in determining whether they will be able to slow the rate of interest rate increases at their upcoming meeting to just a quarter point increase as opposed to the larger jumps they used for the majority of 2022.
According to sources and documents reviewed by Reuters on Monday, China also issued a second batch of 2023 crude import quotas, increasing the total for this year by 20% from the same time last year.
However, analysts cautioned that, given the downward pressure on the global economy, China’s revival in demand may not be sufficient to raise oil prices.
“The restart of China’s demand is something to look forward to, and the social vitality of major Chinese cities is rapidly recovering. However, analysts from Haitong Futures stated, “Considering that the recovery of consumption is still at the expected stage, the oil price will most likely remain low and range-bound.”
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A preliminary Reuters poll on Monday indicated that oil stockpiles were likely down 2.4 million barrels and distillate inventories were also down slightly. ENERGYUSA] On Tuesday, 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 Wednesday, the Energy Information Administration, the United States Department of Energy’s statistical arm, will release its own data.
