During today’s trade, Monday, May 22, 2023, crude oil prices fell more than 1% amid fears of an economic slowdown that could curb demand.

US debt ceiling talks and concerns about demand recovery in China offset support from lower supplies from Canada and OPEC+ producers.

Crude oil price today

At 06:55am GMT (09:55am Mecca), benchmark Brent crude futures for July 2023 delivery were down 1.14% at $74.72 a barrel.

West Texas Intermediate crude futures – for June 2023 delivery – fell 1.22% to $70.68 a barrel, according to data seen by the specialist energy site.

On Friday, May 19, crude oil prices ended lower, but posted their first weekly gain in 5 weeks.

Over the past week, Brent and West Texas Intermediate crude prices posted gains of around 1.9% and 2.2% respectively, posting their first weekly gains in 5 weeks.

Oil price analysis

“The U.S. is the world’s largest oil consumer, and investors are concerned that China’s recovery is stalling after weak economic data reports over the past two weeks,” VIG analyst Tony Sycamore said.

“If the housing market continues to fall and policymakers fail to respond, the risk of a double-dip recession in China — the world’s largest crude oil importer and second oil consumer — increases, signaling bad news for crude oil consumption and demand,” Sycamore added. .

Last week, both crude oil benchmarks rose nearly 2%, their first weekly gain in 5 weeks, after wildfires in Canada’s Alberta shut down much of the crude supply.

Oil supply

Analysts at Goldman Sachs and JP Morgan said the impact of voluntary production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, known as the OPEC+ alliance, was still being felt after it took effect this month.

JP Morgan said the group’s total crude and oil product exports fell by 1.7 million barrels a day through May 16, and that Russian oil exports will decline at the end of May.

On Saturday, the Group of Seven nations pledged at their annual leaders’ meeting to step up efforts to counter Russia’s evasion of curbing prices for its oil and fuel exports, while “avoiding leakages and protecting global energy supplies.”

The Executive Director of the International Energy Agency, Fatih Birol, said that these reinforcements are not expected to change the supply situation of crude and oil products, which the agency is currently committed to analyzing.

Oil is required

In its latest monthly report, the International Energy Agency warned of shortages in the second half; Demand is expected to exceed supply by about two million barrels per day.

“Whether the new restrictions will affect Russian oil production remains to be seen, as the Russians have been very effective at finding ways around European and US sanctions, and sanctions have proven difficult to enforce,” VIG analyst Tony Sycamore said. Reuters.

For its part, energy services company Baker Hughes said the number of U.S. oil rigs fell by 11 to 575 in the week ended May 19, the biggest weekly decline since September 2021.

ING said: “The slowdown in US drilling activity is a concern for the oil market, which is expected to see a large deficit in the second half of the year.”

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