On Wednesday, oil fell, with Brent crude close to its lowest level this year. This was due to concerns about recession and the easing of fears that a Western ban on Russian oil prices would severely curb supply.
The U.S. dollar was supported despite warnings from large U.S. banks about a possible recession in the future. The stronger dollar makes oil more costly for holders of other currencies, which tends to reduce the appetite for risk assets.
#Oil prices are at their lowest level in nearly a year. Brent crude fell $1.05, or 1.3%, to $78.30 a barrel by 1020 GMT. It touched $77.74 earlier, the lowest since 3rd Jan #USA crude was down $1.24 or 1.7% to $73.01 and touched $72.25. pic.twitter.com/jEX7ld9s8Q
— Share_Talk ™ (@Share_Talk) December 7, 2022
Brent crude oil fell 1.3% to $78.30 per barrel, or $1.05, by 1020 GMT. It was at $77.74 an hour earlier, its lowest level since Jan. The U.S. crude oil was at $72.25, or 1.7%, lower than December’s lows.
Claudio Galimberti (senior vice president at Rystad Energy), stated that there is still a lot of uncertainty in today’s markets. He also said that Russia’s crude oil production may not fall as quickly as previously expected.
Brent fell below $80 Tuesday, the only time it has done so in 2022. This is despite the fact that the gains of the year have been recouped. They had lifted prices to $147 in March following Russia’s invasion of Ukraine.
There were growing concerns that Russia’s price cap could lead to a supply shock. According to the Vedomosti daily, Russia is looking at options to counter the Western-imposed cap on oil sales to certain countries.
PVM, an oil broker, stated that the geopolitical premium for risk has “almost disappeared”, but that inflation worries have not. Investors aren’t worried at all about any possible supply shortages that could result from the EU ban on Russian oil sales and the price cap.
A Chinese demand recovery may have helped to support prices.
China Wednesday announced the most radical changes to its anti-COVID regime since the pandemic started. These rules were loosening that prevented the spread of the virus, but also hampered the second-largest economy in the world and sparked protests.
The Tuesday report of the American Petroleum Institute, an industry group, was also supported. According to market sources, it said that crude stock fell by approximately 6.4 million barrels.
The Energy Information Administration’s latest U.S. supply report is due at 1530 GMT. It will be discussed whether or not it confirms the substantial decline in crude stockpiles.
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