World oil price lost nearly 5% in the past week

The oil market was volatile in the past trading week due to the gloomy global economic growth outlook and tight supply due to the ongoing conflict between Russia and Ukraine. Although the European Union (EU) is considering banning Russian oil imports, a move that could make supplies tighter, oil prices have still lost nearly 5% in the past week.

The energy market started the new week with quite a positive situation, as oil prices increased by more than 1% on April 18 due to the production shutdown in Libya, adding to concerns about already tight global supply. because of the Ukraine crisis.

Observers believe that oil will still witness strong price fluctuations because of global production in the near future. Jeffrey Halley, an analyst at brokerage OANDA (USA), said that with the current tight global supply, even the smallest disruption can have a big impact on prices.

Oil prices fell about 5% in the next session, due to concerns about demand after the International Monetary Fund (IMF) lowered its forecast for global economic growth and warned of inflation. high.

World oil prices fell due to downward forecasts of the world economy

The IMF downgraded its forecast for global economic growth by nearly 1 percentage point due to Russia-Ukraine tensions, and said inflation was seen as a “clear and present threat” for many countries. The gloomy outlook has added pressure on oil prices, which have been hit by the dollar at a two-year high. A stronger greenback makes USD-denominated commodities more expensive for holders of other currencies, which can reduce demand.

This decline took place even as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, or OPEC+, cut output as Russia’s output began to fall due to sanctions from Russia. The West. OPEC+ produced below its target of 1.45 million bpd in March 2022, and Russia produced 300,000 bpd below target, at 10.018 million bpd.

Oil prices continued to fluctuate in opposite directions in the session of April 20 before rising again on the session of April 21, due to concerns about the disruption of oil supply.

The market sold less oil after US Treasury Secretary Janet Yellen said that the EU needs to be cautious about a complete ban on Russian energy imports because such a move could cause a spike in oil prices.

By the last session of the week on April 22, world oil prices reversed to decrease due to weak global economic growth prospects, high interest rates and strict blockade measures in China related to the COVID-19 epidemic. -19 is affecting consumption demand.

At the end of this session, the price of Brent oil fell by 1.68 USD (equivalent to 1.6%) to 106.65 USD/barrel. WTI oil price lost 1.72 USD (equivalent to 1.7 %) to 102.07 USD/barrel.

Last month, Brent crude futures touched $139 a barrel, their highest since 2008. However, both oil contracts have lost nearly 5% this week, on concerns about weakening demand.

The IMF could further lower its global economic forecast if European countries extend sanctions on Russia and energy prices move higher.

Meanwhile, a source from the German government said that the country has lowered its economic growth forecast for 2022 from 3.6% to 2.2%.

In China, demand for gasoline, diesel and aviation fuel in April 2022 is expected to drop 20% year-on-year, as the country’s major cities, including Shanghai, are under lockdown. spread because of the pandemic.

US Federal Reserve Chairman Jerome Powell said a further 0.5 percentage point rate hike “will be discussed” at the Fed’s next policy meeting in May, boosting the dollar. to a two-year high. A stronger dollar makes oil and other commodities more expensive for holders of other currencies.

According to data from oil services company Baker Hughes, the number of oil rigs in the US this week increased by 1 rig to 549 rigs, the highest level since April 2020.

Meanwhile, a European source said that the European Commission (EC) is accelerating the availability of alternative energy sources. The Netherlands said it plans to stop using fuel from Russia by the end of the year.

Morgan Stanley raised its Brent price forecast for the third quarter of 2022 by $10 to $130 a barrel, citing a “larger-than-expected supply deficit” this year due to supply cuts from Russia and Iran. .

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