Posted on by BlackMask Financial

Oil suffers heavy losses on US recession fears

  • Oil prices settled nearly 4% lower on Wednesday
  • March orders for U.S. capital goods declined sharply
  • Exports of Russian crude from western ports set for 4-yr high
    • US oil stocks draw as gasoline demand rebounds -EIA
    • Russian deputy PM says OPEC+ remains efficient tool
    • U.S. consumer confidence falls to nine-month low in April
    • Russian refineries increase output as fuel exports rise
Oil prices rose slightly on Thursday, finding some support after heavy losses in the previous two sessions that were driven by fears of a U.S. recession and an increase in Russian oil exports which dulled the impact of OPEC production cuts. Oil prices dropped almost 4% on Wednesday extending sharp losses in the previous session with recession fears overshadowing a bigger-than-expected fall in U.S. crude inventories. As of Wednesday’s close, Brent is down 4.9% for the week while WTI has lost 4.6%. “Crude prices remain heavy following the plunge below the $80 level as too much demand destruction hit the US economic outlook,” said Edward Moya, an analyst at OANDA, adding that the OPEC was right to cut output earlier this month. “Oil is trying to find a floor and the only thing that could provide some support is technical buying,” Moya said. New orders for key U.S.-manufactured capital goods fell more than expected in March and shipments declined, indicating that depressed business spending on equipment likely pulled back economic growth in the first quarter. OPEC’s share of India’s oil imports fell at the fastest pace in 2022/23 to its lowest in at least 22 years as intake of cheaper Russian oil surged, while China is also ramping up buying of Russia’s Urals oil. Oil loading from Russia’s western ports in April will be the highest since 2019, above 2.4 million barrels per day, despite Moscow’s pledge to cut output. Energy Information Administration (EIA) data showing U.S. crude inventories fell last week by 5.1 million barrels to 460.9 million barrels helped to limit the price fall, far exceeding analyst forecasts of a 1.5 million drop in a Reuters poll. Gasoline and distillate stocks also drew down, sinking by 2.4 million barrels to 221.1 million barrels and almost 600,000 barrels to 111.5 million barrels, respectively, the EIA said.

“The complex appears more focused on a recession  rather than some current EIA statistics that have generally been tilting bullish,” said Jim Ritterbusch of consultancy Ritterbusch and Associates.

A forecast of higher refinery activity, but lower crude exports, will continue a push and pull for weeks. “Refinery runs are set to climb in the weeks ahead, boosting the demand side of the ledger, but countering this is the expectation of lower crude exports, as the tightening of the Brent-WTI spread weighs on buying appetite,” Matt Smith, lead oil analyst for the Americas at Kpler, said. Oil prices have erased all their gains since the Organization of the Petroleum Exporting Countries (OPEC) and producer allies such as Russia, known collectively as OPEC+, announced in early April an additional output reduction until the end of the year. Russian Deputy Prime Minister Alexander Novak said on Wednesday that OPEC+ remains an efficient tool for coordination. Oil prices fell more than 2% on Tuesday as lingering economic concerns and expectations of further interest rate hikes that could curtail fuel demand growth countered signs of improving short-term consumption gains. Investors also are concerned potential interest rate hikes by inflation-fighting central banks could slow economic growth and dent energy demand in the United States, Britain and the European Union. The U.S. Federal Reserve, the Bank of England and the European Central Bank are all expected to raise rates at their coming meetings. The Fed meets over May 2-3. NN: Despite all the blow and go the US and for that matter the global economy is not in a recession. In fact global GDP is up in all civilized countries.. AND demand and consumption is increasing… I jut sit aside and watch the circus and pick off as much cheap oil as i can…. Lets ride this bucking bronco.   Ride them cow boy!