Oil Prices Decline over US Economic Concerns
The oil market traded on a bearish note on Thursday amidst uncertainties in the global economy. The United States (US) crude-oil futures fall from a five-month-high, ending 1.3% lower at $82.16 a barrel.
Meanwhile, the global benchmark Brent declines 1.4% to close at $86.09. West Texas Instrument (WTI) crude couldn’t quite rally above the $83.45 level and traders decided that might be it for now.
Crude prices were under pressure after Thursday’s larger-than-expected increase in weekly initial jobless claims intensified concerns that the U.S. economy is slowing.
However, losses in crude were limited by tightness in global oil supplies, stronger Chinese energy demand, and the fall in the dollar index Thursday to a 10-week low.
A monthly assessment of the outlook for supply and demand from the Organization of the Petroleum Exporting Countries drew a little reaction.
Still, oil import data from China were encouraging in terms of demand prospects, analysts said. Weakness in the crude crack spread is bearish for oil prices.
The crack spread Thursday fell to 1-week low, discouraging refiners from purchasing crude to refine into gasoline and distillates.
China’s General Administration of Customs reported Thursday that China’s Mar crude imports rose +16% m/m to 52.31 MMT (12.37 million bpd), the highest level since June 2020. China’s crude imports year-to-date are up +6.7% year on year at 136.369 MMT.
The ongoing halt of Iraqi crude exports from the Turkish port of Ceyhan is tightening global oil supplies and is bullish for crude prices.
The Turkish government said it wants to negotiate a $1.5 billion settlement that it has been ordered to pay before allowing Iraqi crude exports to resume through its pipeline.
Oil exports of 400,000 bpd from the Turkish port of Ceyhan have been halted since March 25 after Iraq won an arbitration case from the International Chamber of Commerce that said Turkey violated a 1973 pipeline transit agreement by allowing crude from the Kurdish region to be exported without Iraqi government consent.
Crude prices surged after OPEC+ announced a surprise oil production cut of more than 1 million bpd starting May 1. Saudi Arabia said the cuts were a “precautionary measure aimed at supporting the stability of the oil market.” OPEC Mar crude production fell by -80,000 bpd to 29.16 million bpd.
In a bearish factor, Vortexa reported Monday that the amount of crude stored on tankers that have been stationary for at least a week rose +6.8% week on week to 112.83 million bbl in the week ended April 7.
Wednesday’s EIA report showed that U.S. crude oil inventories as of April 7 were +2.8% above the seasonal 5-year average, gasoline inventories were -6.9% below the seasonal 5-year average, and distillate inventories were -11.6% below the 5-year seasonal average.
#Oil Prices Decline over US Economic Concerns
