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Wednesday, May 31, 2023

Crude oil futures slide on macroeconomic trade jitters; ICE Brent down to $65.15/b, NYMEX WTI $55.76/b

London — Crude oil futures prices were retreating on Friday morning in European trading, as bearish economic signals from China and Europe stoked fears of a broad economic slowdown.

At 1145 GMT, the ICE May Brent crude futures were down $1.14/b from Thursday’s settle to $65.15/b, while the NYMEX April light sweet crude contract moved down by 90 cents/b to $55.76/b.

“This morning’s decline is basically the macro risk catching up with the oil price,” said Harry Tchilinguirian, an analyst at BNP Paribas in London.

On Friday morning, Chinese trade data was weighing on prices, after exports fell by more than 20% year on year in February, while imports fell for the third month in a row. That data came on the heels of the European Central Bank reducing its forecast for growth in the eurozone from 1.7% to 1.1% for 2019.

“All of this fuels new fears about the economy in China and the world,” Commerzbank analysts said in a note.

However, crude oil imports into China in February were exceedingly robust up 21.6% year on year at 10.23 million b/d according to customs data, with Tchilinguirian adding that the headlines appeared to be weighing on investor sentiment and fueling derisking rather than a fundamental pull-back.

The market is meanwhile looking ahead to the weekly US rig count figures from Baker Hughes later Friday, which provide a signal on the pace of US output growth.

S&P Global Platts Analytics data released Thursday showed the combined US oil and gas rig count fell by 25 to 1,085 in the reporting week to Wednesday, the lowest since January 2018.

Market participants are also awaiting OPEC’s monthly oil market report, due for release next Thursday, for further cues, especially on whether Saudi Arabia will maintain its pledge to reduce oil output, analysts said.

According to an S&P Global Platts survey of industry officials, analysts and shipping data, Saudi Arabia’s continued output discipline and Venezuela’s struggles under US sanctions led OPEC’s crude oil production in February modestly lower to 30.8 million b/d, down 60,000 b/d from January and representing 79% compliance with the OPEC/non-OPEC production deal.

— Katherine Dunn, [email protected]

— Edited by Alisdair Bowles, [email protected]

Source: S&P Global Platts

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