1. the market overview: the OPEC monthly report forecasts a slight excess in the second quarter as demand falls off in the near future. There was a drop in energy costs on a global scale. After dipping as low as US$70.76 per barrel, WTI crude oil ended the day 4.3% lower at US$71.44. There was a dip in the price of Bren Special crude oil to as low as 76.85 USD per barrel, and it ultimately ended the day down 3.92 percent at 77.49 USD per barrel. For two days in a row, the price of oil in the United States and Burundi plummeted, eventually closing at a three-month low for both countries.
2. Russian defense officials have stated that no U.S. drones were damaged by Russian combat aircraft.
The United States military asserts that Russian fighter jets caught and destroyed an American drone over the Black Sea. Russia refuted this, saying that the U.S. UAV had no radio and had gotten out of control due to excessive maneuvering. It avoided the UAV; Beauty conflict altogether. Then, eight lawmakers from the United States pushed the Defense Department to give Ukraine F-16 fighter aircraft.
3. The upheaval at Silicon Valley banks continues, 3. The head of the banking panel in the US Senate has called for the Fed to tighten up on bank regulation and halt interest rate increases. To avoid a repeat of the Silicon Valley Bank crisis, Democrats in the United States have proposed expanding the scope of “too big to fail” regulations to include additional financial institutions; the Department of Justice and the Securities and Exchange Commission are investigating Silicon Valley Bank for reports and executive dealing; and the United States is seeking statements of interest in the possible selling of Signature Bank.
4. An announcement regarding the next phase of the EU’s planned combined buy of natural gas was promised for this coming Wednesday, according to the EU’s Energy Commissioner.
5. The Saudi energy minister has said that until the end of the year, his country will not violate the current OPEC+ deal and will not transfer oil to any country that puts a price limit on Saudi oil production.
6. It is projected that global oil consumption will increase by 2.32 million barrels per day in 2023, according to OPEC’s monthly report. The global economic development projection for 2023 remains unchanged at 2.6%. (consistent with previous forecast)
According to Ed Moya, an expert at OANDA,
Oil market negativity is being fueled by concerns about a recession.
As inflation came in roughly as expected, it set the scene for the Federal Reserve to raise interest rates again. This led to further declines in oil prices. The economy may fall into a moderate recession as a result of the Fed’s tighter policies, and this may increase the likelihood of a more serious downturn. The drop in Brent crude oil prices below $80 seems to suggest that the market is becoming more negative about the near-term prospects for oil consumption. Brent’s continued decline below $78 could spark a technical sell-off. Oil prices are likely to stay volatile until tonight, when the latest EIA inventory data in the US will be published, as energy dealers cannot find a cause to purchase at the present lows before that, and the inventory is anticipated to rise this time.
Director of Corporate Social Responsibility at Moody’s, Madhavi Bokil
The fate of energy rates this year is still up in the air, and it all comes down to how well the world’s largest countries perform. Market factors of weakening demand and limited supply are likely to keep oil prices fluctuating widely throughout the year. Since this is the case, we anticipate that in 2022, the average price of a barrel of Brent crude oil will be less than $100, but will be $50-$70 higher than the price at the price’s midpoint.
Researcher Ole Hansen of Saxo Bank
It is on these variables that the short-term trajectory of energy costs will rest.
Oil prices dropped for a second day on Tuesday as investors reduced risk in anticipation of a drop in demand for petroleum and gasoline products as a result of the financial crisis triggered by the failure of a Silicon Valley bank. WTI petroleum oil and RBOB fuel costs dropped the most as a result of the U.S. being at the heart of the problem.
Demand for petroleum oil, however, is still anticipated to expand rapidly this year, with growth being pushed primarily by non-OECD nations like China and India. The near-term trajectory will likely be determined by market sentiment toward risk, financial sector cues, and the evolution of yield and interest rate forecasts.
Further complicating matters for the market was the widespread liquidation of long holdings held by hedge funds. With the expectation that oil prices will continue to climb and the curve structure remaining in backwardation despite months of stabilization, hedge funds have been purchasing Brent petroleum contracts almost continuously since late December. The number of net long holdings hit a 17-week peak of 298,000 lots (298 million barrels) in the week ending March 7. This misalignment in strategy, however, raises the potential for a correction in the event that basic and/or technical conditions abruptly shift. Despite these challenges, the present oil price is only about $4 below the average price of $83 since the end of November of last year, so a bigger drop is required to alter the general market mood.
Mining and Energy Analyst at Commonwealth Bank of Australia, Vivek Dhar
With these variables in play, the energy market could see a price increase.
The ongoing drop in Russian crude oil and gasoline shipments poses dangers to the 2023 oil market forecast. The danger of an oil market imbalance, which would lead to higher oil prices, is expected to increase in the second half of 2023 as global crude oil production growth, led by the United States, Norway, and Brazil, falls short of demand growth. Furthermore, the world’s two most numerous nations, India and China, will each see a modest increase in their energy demands. Since this is the case, we anticipate a 14% increase in oil prices during the second half of 2023, when Brent petroleum contracts are projected to rise from $82 per barrel during the first half of 2023 to $88 per barrel during the second half.
The CEO of the biggest private energy trading company in the world, Vitol Group, Russell Hardy
As a result of rising demand and dwindling supplies, the price of a gallon of oil may rise to $100 or more by the end of the year. Increasing demand for gasoline, naphtha, and liquid petroleum gas will push global crude oil consumption to a new record high in 2023, up by 2.2 million barrels per day from 2022. (LPG). And since the supply side can’t expand any further, crude rates could theoretically rise again.