© Archyde.com. Oil prices are falling for the second day in a row, what is the reason?
Arabictrader.com – Crude oil prices witnessed a strong decline during Wednesday’s trading for the second day in a row, amid growing concerns among investors about weak global demand due to a possible economic recession, especially in the United States, which is one of the largest consumers of crude oil in the world.
In terms of transactions, spot contracts fell by 0.47% and recorded about 79.83 per barrel, and US spot crude contracts decreased by 0.20% and reached $74.64 per barrel.
The following are the main reasons that led to the decline in crude oil prices:
Uncertainty about global growth has sparked investor panic about a slowdown in the global economy during the coming period, which in turn will weaken the demand for oil. According to forecasts issued by Bloomberg Agency, it is expected that the global economy will face a state of economic slowdown during the coming period. In this context, the agency expected that the global economy would grow by only 2.4% for the year 2023, compared to its expectations for the global economy to grow by about 3.2% this year, due to the continuing repercussions of the crisis of high global energy prices due to the Russian-Ukrainian war.
In addition, the CEO of Goldman Sachs predicted that the United States will face a recession by next year in a large way, adding that it will be able to reduce inflation to approach the level of 4%, and that the final interest rate will reach 5%, and this comes in conjunction with limited economic growth. By only 1%, and this US economic slowdown may lead to a decline in US demand for crude oil, and this reinforced the drop in oil prices.
Also in this regard, investors turned away from crude oil, in light of the growing expectations of further high increases in US interest rates, given the positive US economic data that was issued earlier this month, and this supports the US Federal Reserve to continue to tighten US monetary policy at a rapid pace. .
At the same time, the US Energy Information Administration, yesterday, Tuesday, reduced its forecast for the growth of global oil demand in 2023 by 160,000 barrels per day, to record only about one million barrels per day, and these new expectations raised market concerns about weak global demand for oil next year, including Negative impact on crude oil prices.