Oil prices fall on the New York Stock Exchange. It is in response to growing concerns about demand during a projected recession in the US, the uncertain future of China’s economy due to rising coronavirus cases and a mild winter dampening energy demand.
A barrel of West Texas Intermediate crude for II deliveries is $76.54 on the NYMEX in New York, down 0.51 percent. On the ICE, Brent crude for March morning delivery traded at $81.76 a barrel, down 0.41 percent.
Can the US Avoid a Recession?
The fall in prices is a reaction to a possible decline in demand for fuel in the coming months. It remains to be seen whether the United States will be able to avoid a recession or have to deal with its consequences. A few days ago, the head of the International Monetary Fund, Kristalina Georgieva, told CBS that the US economy could avoid the full contraction that a third of the world’s economies would likely experience.
The US is the most resilient and can avoid a recession. We see that the labor market remains quite strong, she said.
However, this should not happen - the next few months will give an answer to the question of whether the United States will survive 2023 dry.
China is increasing oil consumption, but for how long?
Fuel prices on the stock exchanges fall as investors suspect fuel demand will be lower than expected. It also works the other way around: as demand increases, so do prices. The usual market mechanisms are at work here.
The source of uncertainty is China. Under normal conditions, they are large consumers of oil, but since 2020, the demand for fuel in this country has decreased significantly. Subsequent lockdowns locked millions of people at home, and industrial plants also slowed down. Although China announced a few weeks ago that it was ending its zero covid policy and is restoring normal operations, the skyrocketing number of cases raises serious doubts that the easing will not end as quickly as it began. If this happens, China will reduce its consumption of fuel, so its price will continue to fall.
Falling prices are forcing oil-producing countries to analyze the situation and possibly cut production. In December 2022, OPEC oil production increased by 150,000 tons. barrels per day. On February 1, a meeting of oil ministers of the OPEC+ countries will take place, and on the same day a decision can be made to reduce production.
Source: Wprost
