Oil prices stable despite EU sanctions
2023.02.03 02:26
Oil prices stable despite EU sanctions
By Tiffany Smith
Budrigannews.com – As the market awaited further signs of fuel demand recovery in China to offset looming slumps in other major economies, oil prices were little changed on Friday, with major benchmarks heading for their second week in a row of losses.
By 0445 GMT, futures were down 16 cents, or 0.2 percent, to $82.01 a barrel, while WTI crude futures were down 17 cents, or 0.2 percent, to $75.71.
Brent has lost more than 5% so far this week, up from a loss of 1% the week before. WTI has also lost nearly 5%, down from 2% the week before.
China, the world’s largest oil importer, has sent mixed signals regarding a recovery in fuel demand, which has lowered prices.
Following the Lunar New Year holiday, ANZ analysts noted a sharp increase in traffic in China’s 15 largest cities, but also noted that Chinese traders had been “relatively absent.”
The oil market has been buoyed so far this year by the possibility of China’s economy recovering after COVID-19 restrictions were relaxed. Additionally, the weaker dollar has made the commodity more affordable for people who hold other currencies.
The United States Federal Reserve’s aggressive interest rate hikes are no longer anticipated, resulting in a decline in the dollar. Despite the fact that inflation has decreased, other major economies’ central banks are continuing with larger rate increases.
Oil’s gains have been limited by the prospect of slow growth in the United States, the world’s largest oil consumer, as well as recessions in Britain, Europe, Japan, and Canada, despite the support of a weaker greenback.
OANDA analyst Edward Moya wrote in a note, “The crude demand outlook needs a clear sign that China’s reopening will be smooth, and that the U.S. economic growth momentum does not deteriorate quickly.”
After a year of larger rate increases, the U.S. central bank cut back to a more moderate rate increase. However, policymakers also predicted that “ongoing increases” in borrowing costs would be required.
According to Priyanka Sachdeva, a market analyst at Phillip Nova, upcoming interest rate hikes in 2023 are likely to weigh on the economies of the United States and Europe, raising concerns of an economic slowdown that is highly likely to reduce global demand.
Investors are also keeping an eye on what happens with the European Union’s February 5 ban on Russian refined products because EU nations will try to reach a deal on Friday to set price caps for Russian oil products.
