Crude Oil Performance
Crude Oil had a mixed week, experiencing a rally to close the week, but ultimately dropping by 1.5%. This marked its 6th consecutive month of losses. Early week gains were erased by a mid-week US Dollar recovery, but market optimism returned after robust US earnings data.
US Data and Market Concerns
US data presented a mixed picture, with GDP data and a decline in US capital goods spending indicating a slowdown in economic growth. This raised concerns about inflation and recession. Friday’s PCE data, showing slightly higher month-on-month and year-on-year figures, hinted at potential rate hikes or the need to maintain restrictive rates, which could impact demand.
US Inventories and Production
The latest EIA inventories data showed a larger-than-expected decline, while motor fuel demand surged in anticipation of the approaching summer. US production decreased by 12.5 million barrels per day in February, reaching its lowest level since December 2022. The Baker Hughes report indicated a steady rig count but a slight decline for the month.
World Bank Commodity Markets Outlook
The World Bank released their latest Commodity Markets Outlook report for 2023 and beyond. The report predicts the sharpest drop in commodity prices since the Covid-19 pandemic. Energy prices are projected to decline by 26% this year, with Brent crude oil expected to average $84 a barrel, down 16% from the 2022 average. Despite these declines, prices for major commodity groups will remain well above their 2015-2019 average levels.
Heading into the new week, several high-rated risk events could impact the US dollar and overall market sentiment, consequently affecting oil prices. The outcome of the US FOMC meeting on Wednesday, where a 25bps hike is expected, could either provide relief or exacerbate recession fears. Market participants will closely follow the Fed’s stance on future rate hikes and their perspective on the ongoing recession concerns. Any rate hikes by the Fed and other central banks could fuel recession fears and hinder further recovery in oil prices.
While there is a significant amount of economic data scheduled for the week, there is nothing directly linked to OPEC+ or oil prices. Market movements will likely be influenced by overall sentiment and the US dollar, which has been a prevailing theme recently. In short, hawkish rhetoric from central banks, especially the Federal Reserve, is likely to increase recession concerns and lead to a dip in oil prices, and vice versa.
ECONOMIC CALENDAR FOR THE WEEK AHEAD:
|Monday, May 1||US ISM Data||14:00|
|Tuesday, May 2||Core Inflation Rate YoY Flash (Euro Area)||09:00|
|Wednesday, May 3||US ISM Services Data||14:00|
|Wednesday, May 3||FOMC Interest Rate Decision and Press Conference||18:00 and 18:30|
|Thursday, May 4||ECB Rate Decision and Press Conference||12:15 and 12:45|
|Friday, May 5||US NFP Jobs Data||12:30|
What is the prediction for oil prices?
Oil price predictions are subject to various factors such as global demand, geopolitical events, production levels, and market speculation. Analysts and experts provide forecasts based on these factors, but it is important to note that oil prices are inherently volatile and can be influenced by unforeseen events, making accurate predictions challenging.
Did Goldman Sachs raise crude price forecast after OPEC+?
As an AI language model, I don’t have access to real-time information or the ability to browse the internet. Therefore, I cannot provide the most up-to-date information on specific events or recent developments, such as Goldman Sachs’ crude price forecast changes after OPEC+. It is recommended to refer to reliable news sources or financial reports for the latest updates on such matters.
Why are crude oil prices falling?
Crude oil prices can fall due to various factors, including oversupply, decreased demand, geopolitical tensions, changes in global economic conditions, fluctuations in currency exchange rates, and government policies affecting production and exports. Additionally, shifts in renewable energy adoption and technological advancements can also impact the demand and pricing dynamics of crude oil.
What is the oil demand forecast for 2023?
Oil demand forecasts for a specific year, such as 2023, depend on multiple factors, including economic growth projections, energy policies, technological advancements, and shifts towards alternative energy sources. Forecasting organizations and institutions, such as the International Energy Agency (IEA) and OPEC, regularly assess and publish oil demand forecasts. Checking their reports or consulting reputable energy research organizations can provide more accurate and up-to-date information on oil demand forecasts for 2023.