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World oil prices are declining

Jun 10, 2023

World oil prices are falling amid rising stockpiles and information on Chinese exports.


Oil prices fell sharply amid rising US stockpiles and weak data on Chinese exports, Reuters reports.

As of 13:30, Brent crude oil futures fell 49 cents (0.7%) to $75.47 per barrel, and the cost of US West Texas Intermediate (WTI) fell 53 cents (0.7%) to $70.76 per barrel.

"Thursday's price movements show how fragile oil is," said UBS analyst Giovanni Staunovo. "Saudi Arabia's [production] cuts pushed prices up a bit, and then talk of a potential return of Iranian barrels sent prices down. Long investors are likely to stay on the sidelines until a more significant decline in oil inventories is seen," he said.

Oil prices rose at the beginning of the week, supported by Saudi Arabia's promise over the weekend to cut more production in addition to the cuts agreed earlier with OPEC+ member countries. However, rising US fuel stockpiles and weak Chinese export data are weighing on the markets. "With the Northern Hemisphere's summer travel season approaching, demand will be a key factor in determining whether tight inventories should drive prices higher or whether weak demand leads to lower prices," said Rob Haworth, senior investment strategist at U.S. Bank.

Some analysts expect oil prices to rise if the US Federal Reserve suspends interest rate hikes at its next meeting on June 13-14. Analysts believe that the Fed's decision could also affect Saudi Arabia's next move.

"What's important is that despite these (Saudi Arabia, US-Iran) production changes, oil remains below $80, no doubt to the great disappointment of the Saudis," said OANDA analyst Craig Earlam. "What happens next may well depend on inflation data and interest rate decisions in the coming weeks," he said.

Author - Serhii Kolomiets, 10/06/2023

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