Oil prices are down 2%, and Brent crude is below $106

Oil prices are down 2%, and Brent crude is below $106

Oil prices fell more than 2% during Thursday’s trading; Economic and recession fears have roiled global financial markets, outstripping supply concerns and geopolitical tensions in Europe.

Oil prices are under pressure this week, along with global financial markets, amid concerns about rising interest rates, the US dollar, and concerns about inflation and a possible recession, and the prolonged closure of Corona in China, the largest importer of crude in the world, affected the oil market.

Oil prices today

Brent crude futures prices, for July delivery, fell 1.79%, to $ 105.55 a barrel.

Also, futures contracts for West Texas Intermediate crude – for delivery in June – decreased by 1.94%, to reach $103.66 a barrel.

Yesterday, Wednesday, oil prices jumped more than 5% after Russia imposed sanctions on 31 companies based in countries that imposed sanctions on Moscow after the Ukrainian invasion.

Inflation in America

“These recession fears are raising their voice and lowering oil prices this morning,” said Hou Lee, economist at Singapore’s Overseas Chinese Banking Corporation, referring to strong US CPI data released on Wednesday.

The US core CPI for the 12 months to April jumped 8.3%; Confirming fears that interest rates will need to rise quickly to tame them.

Russian oil

However, supply concerns stemming from Russia’s invasion of Ukraine have boosted the market, with prices rising more than 35% so far this year.

It is noteworthy that the European Union’s suspension of oil from Russia, a major supplier of crude and fuel in the European Union, may lead to a further tightening of global supplies, which supports prices.

The EU is still arguing over the details of the Russian oil embargo, and the vote needs unanimous support, but it has been postponed; Because Hungary opposes the ban; Because it would be very devastating to her economy.

This led to market unease at the same time that the flow of Russian natural gas to Europe through Ukraine fell by a quarter, the first time that exports through Ukraine had been disrupted since the invasion.

Corona closures

“Until we see some significant political support coming from China or policymakers adopt an alternative strategy for Corona (which seems highly unlikely), oil prices could remain limited in the near term,” said Stephen Innes, managing partner at SBI Asset Management.

The Energy Information Administration said, on Wednesday, that commercial oil stocks in the United States rose, last week, due to a record release of oil from the Strategic Petroleum Reserve, but gasoline stocks fell before the peak of the summer demand season.

US oil production

The Energy Information Administration has lowered its forecast for average oil production in the United States, by 0.8% this year, from its previous estimate, likely to reach the level of 11.91 million barrels per day.

For 2023, average US oil production is likely to record 12.85 million barrels per day, down 0.8% from the previous forecast, but still higher than the previous record set in 2019 of 12.3 million, according to the report.

In 2020 and 2021, oil production in America averaged 11.28 and 11.19 million barrels per day, respectively.