Oil heads for fourth weekly decline on demand growth concerns in US, China; What OPEC says

Both benchmarks - Brent crude and US WTI, are set to fall by more than 1 per cent for the week, which would be the longest streak of weekly declines since November 2021.

Livemint
Published12 May 2023, 05:08 PM IST
Major oil-producing countries led by Saudi Arabia and Russia have said they're throttling back supplies of crude. (AP Photo/Martin Meissner, File)
Major oil-producing countries led by Saudi Arabia and Russia have said they’re throttling back supplies of crude. (AP Photo/Martin Meissner, File)(AP)

Oil prices declined on May 12, heading for a fourth weekly drop, as renewed economic concerns in the United States and China weighed on demand growth in the near-term, a potential trigger for greater volatility in oil markets. The fuel demand growth in two of the largest oil consumers in the world also decides the output supply from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+. 

Brent crude futures last fell 43 cents, or 0.57 per cent, to $74.55 a barrel. West Texas Intermediate (WTI) US crude futures were down 33 cents, or 0.47 per cent, to $70.54. Both benchmarks are set to fall by more than 1 per cent for the week, which would be the longest streak of weekly declines since November 2021. This comes after both Brent and US WTI gained in the first three sessions on positive data of employment in the US - a potential boost for the labour market and decreasing oil inventories. 

Also Read: Oil prices end 3-day rally on US inflation anxiety, unexpected rise to inventories

What's happening in US and China?

There is a growing concern that US will enter into recession as discussions over the US government's debt ceiling have been postponed which has renewed fears that another regional bank is in crisis. Treasury Secretary Janet Yellen said that the US faces financial and economic catastrophe if Congress fails to raise the debt ceiling.

The US Federal Reserve may need to raise interest rates again in its next meeting as the inflation data so far has not convinced Fed Governor Michelle Bowman that prices are receding.The decline in oil prices was still limited by a signal from US energy secretary Jennifer Granholm that the country could repurchase oil for the Strategic Petroleum Reserve (SPR) after completing a congressionally mandated sale next month.

Also, a decline in new loans to businesses in China and weaker economic data earlier in the week has renewed the doubts about its recovery from COVID restrictions the oil demand growth. China's April consumer price data rose at a slower pace and missed expectations, while factory gate deflation deepened, suggesting more stimulus may be needed.

 

OPEC holds global oil demand steady at 2.3 bpd

OPEC's global oil demand forecast for 2023 was held steady for a third month on May 11, with the oil cartel citing the potential Chinese growth to be offset by downside economic risks elsewhere such as the US debt ceiling. The world oil demand in 2023 will rise by 2.33 million barrels per day (bpd), or 2.3 per cent, OPEC said in its monthly report. This was unchanged from 2.32 million bpd forecast last month.

The latest round of oil output cuts announced on April 2 by members of OPEC+ cartel which will last till the end of the year, has failed to boost oil prices in May, that have been hit by further interest rate hikes and concern over the US debt ceiling. However, a day after the announcement, oil prices surged over 8 percent to $83.95 a barrel, marking the highest rise in more than a year. 

 

Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

MoreLess
First Published:12 May 2023, 05:08 PM IST
Business NewsMarketsCommoditiesOil heads for fourth weekly decline on demand growth concerns in US, China; What OPEC says

Most Active Stocks

Tata Steel share price

149.70
07:18 PM | 1 NOV 2024
1.05 (0.71%)

Indian Oil Corporation share price

145.00
07:19 PM | 1 NOV 2024
2.3 (1.61%)

Tata Power share price

445.20
07:19 PM | 1 NOV 2024
5.15 (1.17%)

Bandhan Bank share price

183.65
07:10 PM | 1 NOV 2024
1.4 (0.77%)
More Active Stocks

Market Snapshot

  • Top Gainers
  • Top Losers
  • 52 Week High

Rainbow Childrens Medicare share price

1,545.00
06:59 PM | 1 NOV 2024
-67.25 (-4.17%)

ICICI Securities share price

833.45
06:59 PM | 1 NOV 2024
-32.85 (-3.79%)

Vijaya Diagnostic Centre share price

966.70
06:59 PM | 1 NOV 2024
-30.35 (-3.04%)

Narayana Hrudayalaya share price

1,235.60
06:59 PM | 1 NOV 2024
-36.75 (-2.89%)
More from Top Losers

Brigade Enterprises share price

1,244.80
07:19 PM | 1 NOV 2024
71.75 (6.12%)

PCBL share price

432.15
07:17 PM | 1 NOV 2024
21.35 (5.2%)

Piramal Pharma share price

281.85
07:17 PM | 1 NOV 2024
13.45 (5.01%)

Jubilant Pharmova share price

1,273.00
06:59 PM | 1 NOV 2024
60.65 (5%)
More from Top Gainers

Recommended For You

    More Recommendations

    Gold Prices

    • 24K
    • 22K
    Bangalore
    80,415.000.00
    Chennai
    80,421.000.00
    Delhi
    80,573.000.00
    Kolkata
    80,425.000.00

    Fuel Price

    • Petrol
    • Diesel
    Bangalore
    102.92/L0.00
    Chennai
    100.80/L0.00
    Kolkata
    104.95/L0.00
    New Delhi
    94.77/L0.00

    Popular in Markets

      HomeMarketsPremiumInstant LoanMint Shorts