Oil Prices Show Signs of Recovery After Recent Declines Due to US Recession Fears and Increased Russian Exports
In recent trading, oil prices have started to climb again, following heavy losses over the past two sessions due to fears of a US recession and increased Russian oil exports. Brent crude was trading at $78.01 per barrel, up by 0.4%, while US West Texas Intermediate crude rose by 0.3%, trading at $74.51.
The drop in oil prices came amid concerns of a US economic recession, as well as an increase in Russian oil exports that offset the impact of OPEC’s production cuts. Prices fell by almost 4% on Wednesday alone, continuing the sharp losses seen in the previous session, with recession fears overshadowing a bigger-than-expected fall in US crude inventories.
As of Wednesday’s close, Brent crude had fallen by 4.9% for the week, while US West Texas Intermediate crude had lost 4.6%.
According to Edward Moya, an analyst at OANDA, “Crude prices remain heavy following the plunge below the $80 level as too much demand destruction hit the US economic outlook.” He added that the OPEC was right to cut output earlier this month and that oil is trying to find a floor, with technical buying potentially providing some support.
In March, new orders for key US-manufactured capital goods fell more than expected, with shipments also declining. This indicated that depressed business spending on equipment likely pulled back economic growth in the first quarter.
Furthermore, OPEC’s share of India’s oil imports fell at the fastest pace in 2022/23, dropping to its lowest level in at least 22 years as the country increased its intake of cheaper Russian oil. Meanwhile, China has also been ramping up its purchase of Russia’s Urals oil.
Despite Moscow’s pledge to cut output, oil loading from Russia’s western ports in April will be the highest since 2019, exceeding 2.4 million barrels per day.
In summary, oil prices have shown signs of recovery following recent declines due to US recession fears and increased Russian oil exports. However, ongoing concerns about the US economy and increased competition from Russia could continue to impact the market in the near future.