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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Oil Prices Down Slightly As Economic Worries Weigh On Demand

  • Oil prices extend losses as demand concerns persist despite better-than-expected economic growth in China.
  • Refinery margins remain under pressure with weakness seen in middle distillates and gasoline cracks.
  • Rising bond yields and a stable US dollar continue to weigh down on commodity markets.

Oil prices extended last week’s losses and traded lower early on Monday, weighed down by lingering concerns about demand amid economic growth worries. 

As of 7:08 a.m. EDT on Monday, the U.S. benchmark, WTI Crude, was trading down by 0.31% at $77.60. The international benchmark, Brent Crude, was down by 0.42% on the day at $81.30. 

Oil continued the drop from last week, which was the first week in five to see a weekly decline in prices, as concerns about demand resurfaced despite data from China showing better-than-expected economic growth for the first quarter of the year.   

Across oil markets, “refinery margins remain under pressure, largely a result of weakness in middle distillates. However, gasoline cracks have also started to see some weakness,” ING strategists Warren Patterson and Ewa Manthey said on Monday. 

“The growth-sensitive commodities, such as copper and crude oil prices, fell due to risk-aversion sentiment as the weak US economic data and disappointing tech earnings sparked growth concerns,” Tina Teng, a market analyst at CMC Markets, wrote on Monday.

Rising bond yields and the stabilized U.S. dollar are also weighing down on commodity markets, Teng added. 

A rising U.S. dollar makes crude oil more expensive for holders of other currencies. 

“Crude oil prices traded lower in Asia overnight on a combination of technical factors, such as ongoing attempts to close the gaps down to $80 in Brent and $75.70 in WTI as well as long-liquidation from funds that bought futures contracts following the April 3 OPEC+ production cut announcement,” analysts at Saxo Bank said in a note today.  

“The short-term fundamental outlook also continues to deteriorate with recession worries more than offsetting supply cuts as refinery margins remain under pressure across all the major trading hubs sending a warning sign about demand ahead of the peak consumption season,” they added.  

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on April 24 2023 said:
    It is a temporary hiccup for oil prices since the oil fundamentals are strong as they were a weak ago.

    And while there are some bearish factors such as weak US economic data, efforts to control inflation by hiking interest rate and concerns about recession, the bullish factor of China’s economic rebound is far stronger to eclipse the bearish factors.

    That is why I think there is an element of price manipulation at play in the market probably by oil traders and also the United States aimed at depressing oil prices to start refilling the SPR, undermining the OPEC+ cuts and reducing Russian oil export revenues.

    However, this will be short-lived with prices starting soon to recoup their losses and resume their surge.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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