2023-05-12 22:07:42
Crude oil futures prices closed lower on Friday (12th), and due to concerns about the economic outlook, the WTI Crude Oiland Brent Crude OilPrices fell for the fourth straight week,
energy commodity prices
- West Texas Intermediate (WTI) crude futures for June delivery fell 83 cents, or 1.2%, to settle at $70.04 a barrel for the week. WTI Crude Oildown 1.8%.
- delivered in julyBrent Crude Oil (Brent) futures fell 81 cents, or 1.1%, to $74.17 a barrel for the week. Brent Crude Oildown 1.5%.
- WTI Crude Oiland Brent Crude OilFutures prices both ended lower for the fourth straight week.
- Gasoline futures for June delivery fell 1.1% to settle at $2.43 a gallon, up nearly 2.2% for the week.
- delivered in JuneHot Fuel FuturesPrices fell 1.9 percent to $2.31 a gallon, down 0.4 percent for the week.
- Natural gas futures for June delivery rose 3.5% to settle at $2.27 per million Btu, up 6% for the week.
market drivers
U.S. Energy Secretary Jennifer Granholm said on Thursday afternoon that the Department of Energy plans to buy crude oil next month to rebuild the Strategic Petroleum Reserve (SPR) stockpile, which gave oil prices some support early on Friday.
However, Alex Hodes, an analyst with StoneX’s Kansas City energy team, pointed out that the announcement did not commit to any price level, but instead indicated that the DOE was still considering buybacks. If the market believes that the possibility of a buyback is real, it is expected to artificially provide some support for the oil market in the short term.
However, ongoing troubles for regional U.S. banks and a stalemate over the U.S. government’s debt ceiling have fueled fears that the Federal Reserve and other major central banks are aggressively tightening monetary policy, which could lead to a sharp economic downturn later this year or decline.
Growth in Asia is also a key concern, said Stewart Glickman, associate research director at CFRA Research. “What if the trade slump after China restarts? If China can’t make a meaningful contribution to incremental demand, who can stand up?”
In this context, WTI and Brent Crude OilFutures ended lower on Friday. Warren Patterson, head of commodity strategy at ING, said: “The market has continued to sell off in recent weeks as investor sentiment has grown negatively on the macro environment and its ultimate impact on oil demand.”
Falling refinery margins are also raising questions about the strength of oil demand, Patterson noted. The weaker margins were partly due to supply dynamics, with Russian refined product flows holding up well and, in Asia, Chinese refined product exports remaining strong.
Crude oil prices slumped despite OPEC+’s 1.15 million barrels per day (bpd) production cut taking effect this month. Meanwhile, Russia has pledged to cut production by 500,000 bpd by the end of the year, but news reports have questioned its pledge.
But Glickman believes that the situation on the supply side seems less bearish, because OPEC + has shown a willingness to be flexible and implemented unexpected production cuts, and Russia faces sanctions and price ceilings, which means that Russia will not be interested in increasing production.
Glickman believes that as long as the U.S. resolves the debt ceiling crisis, China’s activities increase, and inflation data is better, then oil prices are expected to rise again.
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