Oil prices retreated slightly on Monday and approached their lows for the year, depressed by the prospect of a sluggish global economy that would reduce demand for black gold.
Around 11:05 a.m. GMT (12:05 p.m. in Paris), a barrel of Brent from the North Sea for delivery in February yielded 0.92%, to 75.40 dollars.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in January, lost 0.84% to 70.42 dollars.
Both benchmarks are struggling to erase their losses that took them to their lowest since December at $75.11 for Brent and $70.08 for WTI on Friday.
Buying barrels while the rest of the market is avoiding black gold recently amounts to “catching a falling knife, a painful exercise”, comment analysts at Oilytics.
As gloomy economic forecasts mount around the world, oil losses might be even steeper if US supplies were not disrupted by a leak on the Keystone pipeline.
“No date for the resumption of operations has been announced,” commented ING analysts.
Investors will learn Tuesday of OPEC’s monthly report on its forecasts for supply and demand, followed the next day by that of the International Energy Agency (IEA).
On the gas side, the cold spell which hit Europe and which should boost demand has so far not caused prices to react.
The Dutch TTF futures contract, considered the European benchmark, yielded 3.75%, at 134.18 euros per megawatt hour (MWh).
JP Morgan analysts estimate that “if demand continues to be weaker than usual and if liquid natural gas (LNG) deliveries continue, and despite the cold spell forecast for the next two weeks, prices” may fall below their current valuation of 129 euros per megawatt-hour in 2023.
“Prices remain 6 to 7 times higher than their historical average” due to the Russian invasion of Ukraine, they point out, recalling that the recent drop in prices “is not a return to normal”.
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