Last Update: June 07, 2023, 00:51 IST
New York, United States (USA)
Both crude oil benchmarks climbed for a third day in a row on Monday after Saudi Arabia, the world’s top exporter, said over the weekend it would cut its output by 1 million barrels per day (bpd) to 9 million bpd in July. (Image: Reuters file)
Meanwhile, the US dollar rose against a basket of currencies to its highest level since hitting a 10-week high on May 31.
Oil prices fell on Tuesday as concerns sluggish global economic growth could weigh on energy demand after Saudi Arabia pledged to deepen production cuts.
Brent futures fell 34 cents, or 0.4%, to $76.37 a barrel at 1:48 p.m. EDT (1748 GMT), while US West Texas Intermediate (WTI) crude fell 34 cents, or 0.5%, to $71.81.
Both crude oil benchmarks climbed for a third day in a row on Monday after Saudi Arabia, the world’s top exporter, said over the weekend it would cut its output by 1 million barrels per day (bpd) to 9 million bpd in July.
But weak demand, strong non-OPEC supply, slowing economic growth in China and a possible recession in the US and Europe mean the Saudi cut is unlikely to achieve “sustainable price growth” in the high $80s and low $90s, Citi analysts said. said in a note on Tuesday.
The US dollar, meanwhile, rose to its highest against a basket of currencies after hitting a 10-week high on May 31, as investors waited for new signals on whether the US Federal Reserve would cut interest rates in June. Will increase or stop.
A stronger dollar can reduce demand for oil by making the fuel more expensive for holders of other currencies.
One of those signals came from the US services sector, which grew barely in May as new orders slowed.
“Crude prices are underwhelming as global growth concerns suggest a very weak crude demand outlook,” said Edward Moya, senior market analyst at data and analytics firm OANDA.
Supply chain pressures cooled again in May, New York Fed data showed, in a development that further eased one of the key factors helping drive rising inflationary pressures around work.
The mood was further worsened by data on Germany’s industrial orders unexpectedly falling in April.
However, the World Bank raised its 2023 global growth outlook as the US, China and other major economies proved more resilient than forecast, but said higher interest rates and tighter debt would weigh heavily on next year’s results.
Higher interest rates push up the cost of borrowing, which can slow the economy and reduce demand for oil.
Looking ahead, markets this week await data from the US and China that could provide signs of renewed demand in the world’s two biggest oil consumers.
China, the second biggest oil consumer, will release its trade data for May on Wednesday.
In the US, the Energy Information Administration (EIA) forecasts US crude production to increase from 11.9 million bpd in 2022 to 12.6 million bpd in 2023 and 12.8 million bpd in 2024, compared to a record 12.3 million bpd in 2019 Is.
The EIA also forecast that US oil demand would increase from 20.3 million bpd in 2022 to 20.4 million bpd in 2023 and 20.7 million bpd in 2024. This was compared with a record 20.8 million bpd in 2005, with EIA data going back to 1973.
The market is still awaiting U.S. oil inventory data from the American Petroleum Institute (API), an industry group, on Tuesday at 4:30 p.m. EDT and the EIA on Wednesday at 10:30 a.m. EDT.
According to a Reuters poll, analysts estimate US energy firms stored about 1.0 million barrels of crude during the week ended June 2. [EIA/S] [API/S]
This would be the second consecutive weekly increase and compares with an increase of 2.0 million barrels in the same week last year and an average increase of 2.3 million barrels over five years (2018-2022).
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – reuters,
