New session in decline for oil which even today remains in the grip of the bears.
Oil still down after yesterday’s sinking
The black gold, after closing yesterday’s session with a lunge of almost four percentage points, today tried to timidly climb the slope, without however showing any conviction.
The WTI, in fact, has eliminated the small advantage and starting from the very early afternoon has started a descent still in progress. In the last few minutes, oil is at 88.15 dollars, with a decline of 2.8%.
Oil: this is what OPEC + decided yesterday
Black gold continues to be hit by strong sales, after Opec + decided to increase oil production in September by just 0.1 million barrels per day in yesterday’s meeting. The market was pricing in an unchanged or marginally growing level of shares.
Equita SIM points out that most OPEC members were unable to increase production in the short term, which means that the actual increase will be much smaller, reasonably 20,000-30,000 barrels per day.
OPEC would not have proceeded with greater increases in quotas due to the lack of “spare capacity” among its members.
In June, OPEC + production was lower than production quotas of about 2.84 million barrels per day, recalling that now the next OPEC + meeting will be held on 5 September.
Oil: decline fueled by bad news from the US
Equita SIM analysts explain that Brent and WTI prices fell yesterday due to data released by the EIA, the division of the US Department of Energy.
Yesterday’s numbers showed the unexpected increase in commercial crude oil and gasoline inventories in the United States in the last week of July, as refineries continued to slow processing and product deliveries fell for the second consecutive week.
In detail, strategic oil stocks in the last week have grown by about 4.5 million barrels, against the forecast of a decline of 600 thousand barrels.
Gasoline reserves rose by 0.2 million, while expectations were for a contraction of 1.6 million, and distillate stocks fell by 2.4 million barrels, compared to an estimate of a reduction of 1. 6 million barrels.
According to Equita SIM, the data fueled concerns about the drop in demand for crude oil due to the ongoing economic slowdown.
Oil: the final blow from the Bank of England
In the wake of these fears, oil continues to fall today, going below 90 dollars a barrel, an event that has not happened since last February.
The alarm raised by the Bank of England also contributed to fueling the negative sentiment.
On the one hand, the cost of money has been raised by 0.5%, the strongest tightening in a single session in the last 27 years.
On the other hand, the Central Bank of England has announced that the UK economy will enter recession in the last three months of this year and will remain there throughout 2023.