The price of a barrel of West Texas Intermediate (WTI), the benchmark American variety, continued to plummet on Friday and came close to the symbolic threshold of 70 dollars, which it has not crossed for almost a year.
During the session, following falling as low as $70.08, WTI for January delivery fell 0.61% to close at $71.02.
As for the barrel of Brent from the North Sea, with maturity in February, it recorded a new low for the year, at 75.11 dollars, and fell 0.06%, to end at 76.10 dollars.
Since the beginning of the week, the news theoretically favorable to a rise in prices have followed one another, without however managing to stop the fall of black gold.
Prices had initially started rising on Friday, boosted by statements from Russian President Vladimir Putin, who said he was considering “a possible reduction in production if necessary”.
But they quickly ran out of steam, to sign a sixth consecutive withdrawal session.
In one week, WTI lost more than 12% of its value, just like Brent.
“It’s a total rout,” commented Matt Smith of Kpler, who “looks like we’re regarding to test $70” for WTI.
The market had hoped, in vain, for a rebound around $72, the level set by US President Joe Biden to start rebuilding strategic reserves, which have shrunk by 234 million barrels since the start of September 2021.
For Edward Moya, of Oanda, the market remains obsessed with the weakening of supply, with the approach of a possible recession.
Far from being enthusiastic, as initially imagined, regarding the easing of health restrictions in China, traders see the risk of “a congestion of the Chinese health system”, according to the analyst, which would affect the activity economy and oil demand.
For Matt Smith, the market is not only concerned with the demand for crude, but also for refined products.
For several months, fears of an insufficient diesel supply had contributed to price resistance.
But the latest American and European figures show that demand is not there, even though refineries are running at full speed.
Nothing, in the short term, seems capable of reversing the trend which is driving prices irresistibly downward.
“This suggests that OPEC (Organization of the Petroleum Exporting Countries) will intervene in the near future” and reduce its production, anticipates Matt Smith.
