Oil Plunges To Post-Putin Lows, Breaks Key Technical Support
As Fed-induced recessionary fears soar, so oil prices are reversing their recent gains fast.
“The price action in crude oil continues to be dictated by the battle between traders looking for an economic slowdown and the physical market which continues to signal tightness. Demand, however, has started to show signs of weakness with the EIA reporting a counter-seasonal drop in US gasoline consumption to the lowest on a seasonal basis since 2000,” Saxo Bank said in a note.
WTI is trading back to its lowest since April…
And has broken below the key 200-day moving-average…
But Brent crude is trading back to Feb levels – erasing all of the post-invasion premium in the international oil benchmark…
However, as Bloomberg reports, OPEC producers will need to pump crude at the fastest pace in five years in 2023 if they are to balance oil supply and demand. Capacity constraints suggest they may struggle.
The latest forecasts from the International Energy Agency, the US Energy Information Administration and the Organization of Petroleum Exporting Countries all show global oil demand rising strongly again in 2023, despite growing fears over mounting inflation and weakening economic growth. A lack of investment in new crude production capacity means that the OPEC group of producers will need to pump more to meet that demand.
All three forecasters see global oil demand increasing by at least 2 million barrels a day next year, taking it back above the 2019 level for the first time since the Covid-19 pandemic struck in early 2020.
So it may not be over yet.
Thu, 07/14/2022 – 09:53