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Friday, March 31, 2023

Oil deepens its fall and records its lowest value in two months

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oil prices write down strong fall this Tuesday, March 14, extending the leave of the previous day and writing down his lowest value in two months. This happens within the framework of Silicon Valley Bank collapse that shakes the markets variable income and generates fear of a new financial crisis.

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crude oil futures brent low 3.7%to $77.78 per barrel. US crude oil futures West Texas Intermediate (WTI) fall a 4.1%to $71.70 the barrel.

Oil prices fall in line with continued decline in equity markets. “We see the events of Monday around the regional banks of the United States as more noise than news for commodity marketsand should not have any significant impact in the medium to long term,” said the UBS analyst Carsten Menke.

the sudden closure of SVB Financial shot the concern about risks that other banks run as a result of the sharp rises in interest rates applied by the Federal Reserve American in the past year.

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OPEC raised its growth forecast for Chinese oil demand in 2023 due to the relaxation of restrictions due to COVID-19 in the country, though kept the world total stableciting potential downside risks to global growth.

The world demand for oil in 2023 will increase by 2.32 million barrels per day (bpd), or 2.3%, the Organization of the Petroleum Exporting Countries said in a monthly report. This forecast does not change compared to last month. Chinese demand for their part is estimated to grow by 710,000 bpd in 2023, above last month’s forecast of 590,000.

“The reopening of China, following the lifting of the strict zero-COVID policy, will add considerable momentum to global economic growth,” OPEC said in the report. “Rapid rises in interest rates and global debt levels could cause significant negative spillover effects and negatively impact global growth dynamics,” it added.

Traders are no longer expecting a 50 basis point (bp) rate hike next week, and currently forecast a rise of 25 bpeven before US consumer price data is released on Tuesday.

A lower rate hike could mean a weakening dollarwhich in turn is a signal bullish for oil prices. The result of consumer inflation in the United States was lower than expected, which contributes to fueling this expectation of lower increases.

Source: Ambito

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