Monday, 6 February 2023


Oil slumps 2% on weak U.S. manufacturing, new crude build forecast By

Oil up in Choppy, Pre-Fed Trade; U.S. Crude Still Under $100

© Reuters.

By Barani Krishnan – Oil’s two-week rally paused meaningfully for the first time on Tuesday as crude prices fell as much as 2% from a contraction in U.S. manufacturing that reinforced fears of a recession in an economy still suffering relatively high inflation versus growth.

Expectations of a fifth straight weekly build in U.S. crude stockpiles also weighed on sentiment in a market that had risen in four of the past seven sessions. 

New York-traded West Texas Intermediate, or WTI, crude for settled down $1.49, or 1.8%, at $80.13 a barrel after an intraday low of $79.67. The U.S. crude benchmark rose nearly 15% over the past two weeks on bets of a huge pickup in demand from China, which this month abandoned COVID-related restrictions that had been weighing on energy usage in the world’s largest oil importer. Prior to the rally, WTI dropped 8.5% in the opening week of 2023.

London-traded Brent crude for settled down $2.06, or 2.34%, at $86.13 a barrel. The global crude benchmark rose 11% over the past two weeks, after an 8% slump in its debut week for the year.

U.S. business activity contracted in January for the seventh straight month, according to Standard & Poors’ first reading for 2023 although the downturn moderated across both the and sectors for the first time since September and business confidence strengthened as the new year began.

“Energy traders will wait to see how the supply side of the market evolves,” said Ed Moya, analyst at online trading platform OANDA. “Some energy traders are still skeptical on how quickly China’s crude demand will bounce back this quarter.”

Analysts at JPMorgan & Co raised their forecast for Chinese crude demand but maintained their Brent forecast for 2023 at an average of $90 versus higher expectations by market bulls. “Absent any major geopolitical events, it would be difficult for oil prices to breach $100 in 2023 as there should be more supply than demand this year,”  JPM’s analysts said in a note.

Economies in the six-member Gulf Cooperation Council, or GCC, will grow this year at half the rate of 2022 as oil revenues take a hit from an expected mild global slowdown, Reuters said separately in a poll taken on the Arab world’s leading economies.

The Saud-led 13-member Organization of the Petroleum Exporting Countries and its 10 Russian-steered allies — collectively known as OPEC+ — is likely to keep output unchanged when the oil producing alliance…

Click Here to Read the Full Original Article at All News…