The price of oil has embarked on a decline for the last week and a half, losing 10%, mainly due to weak economic data in the United States that suggests a decrease in demand.
The US benchmark West Texas Intermediate (WTI) has fallen 9.96% since Friday, April 14, while the European North Sea Brent has fallen 9.99 percent. The Mexican export mix has lost 10.99 percent.
Ana Azuara, a Commodities analyst at Banco Base, explained that in recent days data has been released that indicates weakness in the United States economy.
The United States is the main consumer of oil in the world and if its economy falls into recession, obviously this will impact demand expectations, which will decrease, which is negative for prices,” he said.
This Wednesday, crude oil prices fell almost 4%, after it was revealed that inventories in the United States fell more than expected. The Energy Information Administration (EIA) of that country reported that crude oil inventories fell by 5.1 million barrels per day last week, to settle at 460.9 million barrels.
Analysts polled by Reuters had estimated a weekly draw in inventories of 1.5 million barrels.
With this they add up to five weeks with oil inventories falling in the United States. In that period they add a drop of 24.9 million barrels.
“The complex seems more focused on a recession that may be underway, rather than some current EIA statistics that have generally been skewed to the upside,” said Jim Ritterbusch of consultancy Ritterbusch and Associates.
West Texas Intermediate (WTI) fell 3.59% on Wednesday to $74.30 a barrel, while Brent had an intraday loss of 3.81% to $77.69. Mexican crude lost 4.36%, to 65.18 dollars a barrel, according to data from Petróleos Mexicanos (Pemex).
weak data
In addition to the fall in inventories, this Wednesday international crude oil prices came under pressure after it was reported that consumer confidence in the United States touched its lowest level in nine months, which strengthens the expectation of a slowdown in that country. .
“Such data will add credibility to claims that the US economy is approaching a recession,” said Stephen Brennock of PVM Oil.
With the losses they have had in recent days, the petroprices have already erased the gains they had since the beginning of April due to the cut in production announced by the Organization of the Petroleum Exporting Countries and its allies (OPEC+).
Ana Azuara assured that the publication of the data on the Gross Domestic Product (GDP) of the United States this Thursday will be crucial for the trajectory that the price of crude oil follows in the following days.
He said that if there are signs that the economy is going to fall into recession, the WTI could sink to a minimum of 69-70 dollars per barrel in the coming days. With the losses of the last few days, so far in 2023 the WTI it falls 7.43%, Brent loses 9.57%, while the mix accumulates a decrease of 6.50 percent.
Azuara explained that in addition to the economic dynamics of the United States, in the following months the behavior of the Chinese economy, the second largest oil consumer in the world, will be decisive.
“On the other hand, you have China, which although the market had been very optimistic that with the end of the zero Covid policy, the economy was going to accelerate significantly, it is something that has not happened so far,” said the Base Bank Analyst.
Ana Azuara highlighted that the data on China’s GDP published last week was good, “and the economy is expected to reach the growth that the government set as its objective for this year”, so the demand for oil may be strong this year. .
oil companies fall
The shares of the largest oil companies on the stock market have fallen in line with the prices of crude oil. Since Friday the 14th, the papers of the American Chevron have fallen 3.75%, to 165.98 dollars each.
They are followed by the falls of the British Shell (-1.16%), the French TotalEnergies (-0.54%) and the also American Exxon Mobil (-0.52%), according to data from the Investing platform.
Analysts have explained that the shares of oil companies move in line with the price of crude oil, since the latter has a direct impact on their sales. (With information from Agencies)
