A slight decrease in prices - What are the reasons and what are the expectations
Crude oil futures prices witnessed a slight decline during Thursday morning trading, as Brent and WTI crude oil fell today to reach USD 67.27 and USD 63.97 per barrel, respectively.
This decline comes after a previous session in which the two stocks settled at a height of more than 1%.
A shift in market direction
The focus of investors shifted away from the supply risks associated with the war in Ukraine, and turned towards fears of a global oversupply of crude as the end of summer and the beginning of autumn approaches, a period that usually sees a decline in seasonal demand.
Negative and balancing factors
Several factors contributed to this downward pressure, most notably:
- US pressure on India: Traders are waiting for India's reaction to US pressure to limit its imports of Russian oil, especially after the lifting of tariffs.
However, analysts expect India to continue buying aggressively in the near term, limiting the global negative impact.
- Slowing the pace of decline in US inventories: although weekly data from the US Energy Information Administration showed a larger-than-expected decline in crude inventories, the pace of this decline has slowed compared to the previous week, raising some concern about the strength of demand.
On the other hand, some of the losses were offset by a number of positive factors, the most important of which were:
- Escalating attacks on energy infrastructure: The escalating attacks on energy facilities between Russia and Ukraine have revived fears of supply disruptions, providing a floor under prices.
- Expectations of monetary policy easing: Markets remain optimistic about the possibility of the Federal Reserve cutting interest rates to support economic growth and energy demand, boosting positive sentiment among traders.
