because a sign of economic slowdown – Corriere.it

Oil still slightly down today on the commodity markets after the crash recorded yesterday: the WTI barrel for delivery in June changes hands at 71.55 dollars, a drop of 0.24%. Brent, same maturity, is traded at 75.22 dollars a barrel with a reduction of 0.13%. It’s always recessionary concerns that drive the downturns these days. Oil on Tuesday lost 5.3% to $71.66 after Treasury Secretary Janet Yellen warned on Monday that the country could default by June 1 if Congress does not raise the ceiling of the debt. A concern that also reverberated on the stock markets on Tuesday 2 May: the Dow Jones lost 367.11 points (-1.08%), the S&P 500 lost 48.37 points (-1.16%), the Nasdaq Composite dropped 132.09 points (-1.08%).

Fears about rate hikes

Fears of an economic slowdown were triggered by impending interest rate hikes by major central banks, with two US regional banks suspended after -20% hikes following the bailout of First Republic Bank, which could ultimately affect demand of energy. Adding to these concerns, the unexpected drop in Chinese production in April also raised concerns about oil demand. Also helping to accelerate declines since early April was OPEC+ which cut its production target, reviving supply concerns.

Forecasts

April oil market reports show an unusual difference in official forecasts: OPEC and the International Energy Agency (IEA) point to a deficit for the second half of the year, while the US Energy Information Administration (EIA) estimates a persistent surplus in each quarter. Despite China’s reopening and ongoing recovery in the aviation sector, the EIA estimates a surplus due to global supply (which however remains resilient), growing despite OPEC+ cuts and international sanctions against Russia . The US remains a strong supply driver, although US production is growing below its potential, he points out a report by Intesa Sanpaolo. The EIA predicts that in the last quarter of 2024, US production could exceed 12.8 million barrels per day, approaching the historical peak of 13 million after almost 4 years. As an example, on March 16, ExxonMobil announced the start of expansion operations at its Beaumont refinery, adding 250,000 barrels per day (b/d) of capacity. “The expansion makes the oil refinery one of the largest in the United States, as measured by crude oil refining capacity,” the US Energy Information Administration said.