Oil prices ended sharply lower on Tuesday, the lowest in four months, traders still concerned about a possible recession following monetary tightening, which creates the first turbulence in the United States in the banking sector.
The price of a barrel of Brent from the North Sea for delivery in May lost 4.11%, closing at $ 77.45. The barrel of West Texas Intermediate (WTI) US, with maturity in April, gave up 4.63%, to 71.33 dollars.
In post-close electronic trading, the market's two benchmark varieties even continued their slide, with Brent falling below $77 and WTI below $71, for the first time since early December.
'Fear of recession'
"This banking crisis reinforces the fear of a recession," said John Kilduff of Again Capital, referring to the failure of three U.S. institutions in a matter of days. Despite some form of stabilization on Wall Street on Tuesday and the emergency measures taken Sunday by the US authorities to guarantee deposits, "this affects investor confidence" in the financial system and "in the economy in general." "And that doesn't bode well for oil demand," the analyst said.
"Aside from gold, the entire commodities sector seems to think we're heading for a recession," said Bill O'Grady of Confluence Investment. "And most traditional indicators point to it," insisted the analyst, mentioning in particular the evolution of bond yields, higher in the short term than in the long term for months, a phenomenon that almost systematically precedes a recession.
For Bill O'Grady, the market had so far clung to the prospect of a recovery in Chinese demand, to the point of relativizing the short-term fundamentals, namely abundant supply and low American or even European consumption of refined products.
This had led prices to move since the beginning of the year within tight margins. "It seems that we are out" of this range, and "when you exceed a technical threshold (downwards), it often triggers additional selling" and accelerates the fall, which happened Tuesday at the end of the session.
OPEC intervention expected
RBC analyst Helima Croft on Tuesday raised the possibility of intervention by the Organization of the Petroleum Exporting Countries (OPEC) if prices continued to fall. According to her, the meeting of the ministerial committee (JMMC), on April 3, "offers the opportunity for a change of trajectory". "Reducing production has always been a difficult exercise for them," said John Kilduff, who recalled that the cartel's production increased by 150,000 barrels per day in February compared to January, contradicting the group's commitments, according to Reuters.
For the analyst, OPEC is currently animated by centrifugal forces, several members, especially the United Arab Emirates, disagreeing with the line dictated by Saudi Arabia, which pushed the alliance to announce, in early October, a cut in its production of two million barrels per day to support prices.
The cartel on Tuesday updated its forecast for 2023 and maintained its estimate of a 2.3 million barrels per day increase in demand. It raised Asian demand, supported by China, but lowered that of America and Europe.