WTI for January delivery fell 3.48% to $74.25. (Photo: 123RF)
New York – The price of a barrel of West Texas Intermediate (WTI), the US benchmark variety, closed sharply lower Tuesday, at its lowest level of the year at the end, in a market still concerned about a slump in demand. .
WTI for January delivery fell 3.48% to $74.25. In two sessions, US crude oil is down more than 7%.
It fell to $73.41 in Tuesday’s session, its most explored depth since late December 2021.
As for the barrel of Brent from the North Sea, maturing in February, it dropped 4.02%, to 79.35 dollars, closing for the first time since the beginning of January below 80 dollars.
“The potential effect of another round of rate hikes [de la banque centrale américaine] it scared the market for the possible repercussions on the global economy”, commented Susannah Streeter, of Hargreaves Lansdown, a sentiment that already on Monday justified the trend reversal.
Stronger-than-expected monetary tightening could weaken demand for black gold and further depress prices.
Added to this are the uncertainties over the health situation in China, the world’s largest importer, with the lifting of restrictions remaining very gradual.
Another element is the recovery of the dollar, which has rebounded in the last two days after several weeks of unfavorable slide in oil prices, most often denominated in greenbacks.
For TD Securities’ Bart Melek, on the supply side, some traders were disappointed by Sunday’s announcement of maintaining production by the Organization of the Petroleum Exporting Countries (OPEC) and their OPEC+ allies.
As a result, “the market is concerned about seeing too much supply” globally, the analyst explains.
Speculators retreat
Brokers also reacted to the entry into force of the European embargo on Russian oil, together with a price cap mechanism for deliveries to destinations other than Europe.
For Craig Erlam, an analyst at Oanda, “in many respects, this does not improve visibility in the crude oil sector; it can also be said (that these measures) make the prospects more uncertain”.
At this point, “it seems like the only thing guaranteed in the oil market, for now, is volatility,” he says.
Moscow has repeatedly said that Russia will not sell oil to countries that apply the cap.
For Erlam, this mechanism is probably considered by investors as a “status quo”, especially as Russia seeks to improve its “ability to evade sanctions”.
“This means that production remains stable overall,” he points out.
After Tuesday’s plunge, Ural, the main benchmark of Russian oil, for delivery in February, settled at $60, exactly the price high.
According to an official of a shipping company specializing in oil, on condition of anonymity, some varieties are trading at a price close to $50 a barrel, which makes the cap inoperative.
“I have no doubt that there will be buyers for our petroleum products,” Russian Deputy Foreign Minister Sergey Ryabkov said on Tuesday, quoted by Russian news agencies.
“There are people who were able to buy,” betting on big disruptions after the embargo and cap, said Bill O’Grady, of Confluence Investment.
“But nothing happened as they expected and this gave rise to a long liquidation” of positions, i.e. a massive disengagement by speculators, which caused prices to fluctuate.
However, the weakness in oil may only be short-lived, according to Bill O’Grady.
The Russian embargo and cap “will end up interrupting” the flow of Russian oil, warns the analyst, citing the tanker congestion that has formed in recent hours near the Bosphorus Strait, according to various media.
The blockade would be due to the Turkish authorities’ desire to obtain a certificate of insurance from ships intending to leave the Black Sea, for fear that an accident would not be covered.
Furthermore, “OPEC has a lot of leeway to rebalance supply and demand,” believes Bart Melek, “and I expect them to reduce their production if [la chute des prix] Keep on.
