Brent crude prices are set for their first monthly improvement this year, but on a quarterly basis, the international benchmark will record yet another decline.
For West Texas Intermediate, June would mark the second month of gains this year, after April, but on a quarterly basis, the U.S. benchmark will also book a decline.
Bloomberg reports that for Brent crude, this quarter will extend the losing streak to four quarters in a row, which is the worst record for the benchmark in more than 30 years.
For WTI, Bloomberg noted, this last quarter will mark the first back-to-back string of losses since 2019. According to Reuters, the quarterly decline for the U.S. benchmark would be 7%, while for Brent crude, the decline would come in at 6%.
"A significant upward revision (of U.S. GDP data) adds to the list of positive economic surprises in the US lately, with economic resilience aiding to calm some nerves around recession concerns, at least for now," IG analyst Yeap Jun Rong said in a note quoted by Reuters.
Bloomberg, meanwhile, quoted RBC Capital Markets as forecasting that “apathy will set in for the balance of the year” despite an expected uptick in prices as refinery maintenance season ends.
The biggest drivers of the bearish sentiment on oil markets included aggressive monetary tightening from central banks in some of the world’s biggest consumer nations, notably the United States and the European Union, resilient Russian oil exports, and weaker-than-expected Chinese economic growth. Persistent fears of a recession also contributed significantly to the dominant sentiment despite the positive economic surprises noted by IG’s Rong.
These positive surprises, and the revised U.S. GDP figures specifically, may not be such good news for oil prices, after all, as noted by ING analysts in a note from earlier today. According to them, stronger economic growth could lead to more rate hikes.
“Growing expectations of further hikes is one of the factors which is capping the upside in the market, while on the downside, the belief that OPEC+ will take further action if there is significant further weakness provides a floor to the market,” Warren Patterson and Ewa Manthey wrote in the note.
By Irina Slav for Oilprice.com
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