Understanding the Impact of the Recent Economic Data and the OPEC+ Alliance on Oil Prices: What You Need to Know

2023-11-16 21:15:00
Closing price: Oil prices accentuated their losses on Thursday, with the American WTI losing more than 5% during the session, weighed down by the swelling of stocks in the United States and economic signals raising fears for global demand. The barrel of West Texas Intermediate (WTI WTI West Texas Intermediate (WTI), also called Texas Light Sweet, is a variation of crude oil that serves as a standard in setting the price of crude and as a raw material for oil futures contracts with the Nymex (New York Mercantile Exchange). ), the stock exchange specializing in energy.) for delivery in December, fell 4.90% to $72.82, after reaching $72.23, falling 5.05%, its lowest level since July.

Its European equivalent, the barrel of Brent BRENT Brent, or North Sea crude, is a variation of crude oil serving as a benchmark in Europe, listed on the InterContinentalExchange (ICE), a stock exchange specializing in energy trading. It became the first international standard for setting oil prices. North Sea for January delivery lost 4.63% to $77.42 shortly after touching $76.72, also the lowest price since early July.

The two global benchmarks for black gold are thus at their lowest level in four monthsunder pressure “while disappointing American economic data have further darkened the demand outlook”, explains Lukman Otunuga of FXTM to AFP.

????️ The day before, the report on the “swelling of stocks” of oil in the United States and “fears of a slowdown in American economic growth” had already pulled prices down, recalls the analyst.

American commercial crude oil stocks increased by 3.6 million barrels, more than expected by analysts, according to figures published Wednesday by the American Energy Information Administration (EIA).

The market also focused its attention on the level of reserves at Cushing (Oklahoma), the main delivery terminal of the WTI WTI West Texas Intermediate (WTI), also called Texas Light Sweet, is a variation of crude oil that serves as a standard in setting the price of crude and as a raw material for oil futures contracts with the Nymex (New York Mercantile Exchange). ), the stock exchange specializing in energy. in the United States, which increased significantly, according to DNB.

“The tight supply conditions that were widely expected did not materialize, as evidenced by the massive stockpiling in the United States,” comments Stephen Innes of SPI AM.

???????? The inflation rate also fell significantly in October in the United States, to 3.2% over one year, compared to 3.7% in September, thanks in particular to the drop in gasoline prices at the pump, according to the CPI index published Tuesday.

These figures “following weaker than expected employment data at the start of the month, (have) reinforced the idea that the economy is starting to cool” in the country, underlines James Harte, analyst at Tickmill.

The market is now wondering whether Saudi Arabia and Russia, the de facto leaders of the OPEC+ alliance (the Organization of the Petroleum Exporting Countries and its allies) will intervene to stop the fall in prices.

Earlier this month, Saudi Arabia and Russia reaffirmed that they would maintain their production and export cuts until the end of the year, or 300,000 barrels per day of supply of oil and petroleum products. for Russia and a production cut of one million barrels per day for Saudi Arabia.

These reductions complement the reductions introduced since the beginning of May and in force until the end of 2024 by nine producers, including Riyadh, Moscow, Baghdad and Dubai, for a total of 1.6 million barrels daily.

“As we have seen so often in the past, producing (countries) will do whatever it takes to support prices,” says Craig Erlam, analyst at Oanda.

“It is now up to OPEC+ (…) to give a firm message on what it wants to do in 2024 with regard to supply and prices,” says Bjarne Schieldrop, analyst at Seb interviewed by AFP.

The next ministerial meeting of OPEC+ members is scheduled for November 26 in Vienna, headquarters of the alliance.