Breaking News
Investing Pro 0
💎 Access the Market Tools Trusted by Thousands of Investors Get Started

Oil prices ease as economic fears overshadow Saudi output cut

Published Jun 05, 2023 08:58PM ET Updated Jun 06, 2023 03:31PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Pump jacks operate at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford/
 
LCO
+0.57%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
+0.78%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Scott DiSavino

NEW YORK (Reuters) -Oil prices eased about 1% on Tuesday as worries that sluggish global economic growth could reduce energy demand outweighed Saudi Arabia's pledge to deepen output cuts.

Brent futures fell 42 cents, or 0.6%, to settle at $76.29 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 41 cents, or 0.6%, to settle at $71.74.

Prices rose on Monday after Saudi Arabia said over the weekend it would cut output to around 9 million barrels per day (bpd) in July from about 10 million bpd in May.

Saudi Arabia, the world's top oil exporter, also unexpectedly increased the official selling price of its crude to Asian buyers.

However, the Saudi supply cut is unlikely to achieve a "sustainable price increase" into the high $80s and low $90s due to weaker demand, stronger non-OPEC supply, slower economic growth in China and potential recessions in the U.S. and Europe, Citi analysts said in a note.

The U.S. dollar rose to its highest level against a basket of currencies since hitting a 10-week high on May 31 as investors waited on fresh signals on whether the U.S. Federal Reserve will raise or hold interest rates in June.

A stronger dollar can weigh on oil demand by making the fuel more expensive for holders of other currencies.

One of those signals came from the U.S. services sector, which barely grew in May as new orders slowed.

"Crude prices are heavy as global growth concerns continue to suggest a much weaker crude demand outlook," said Edward Moya, senior market analyst at data and analytics firm OANDA.

The mood was further dented by data showing German industrial orders fell unexpectedly in April.

The World Bank, however, raised its 2023 global growth outlook as the U.S., China and other major economies have proven more resilient than forecast, but said higher interest rates and tighter credit will take a bigger toll on next year's results.

Higher interest rates boost borrowing costs, which can slow the economy and reduce oil demand.

The market is awaiting data from the U.S. and China that could provide fresh demand indications in the world's two biggest oil consumers.

China, the second-biggest oil consumer, will release its May trade data on Wednesday.

The Energy Information Administration (EIA) projected U.S. crude output will rise from 11.9 million bpd in 2022 to 12.6 million bpd in 2023 and 12.8 million bpd in 2024, That compares with a record 12.3 million bpd in 2019.

EIA also projected U.S. petroleum demand would rise from 20.3 million bpd in 2022 to 20.4 million bpd in 2023 and 20.7 million bpd in 2024. That compares with a record 20.8 million bpd in 2005, according to EIA data going back to 1973.

The market is also waiting for U.S. oil inventory data from the American Petroleum Institute (API), an industry group, at 4:30 p.m. EDT on Tuesday and the EIA at 10:30 a.m. EDT on Wednesday.

Analysts forecast U.S. energy firms added about 1.0 million barrels of crude into storage during the week ended June 2, according to a Reuters poll. [EIA/S] [API/S]

That would be the second weekly increase in crude stocks in a row and compares with a rise of 2.0 million barrels in the same week last year and a five-year (2018-2022) average increase of 2.3 million barrels.

Oil prices ease as economic fears overshadow Saudi output cut
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (7)
Cool person
Cool person Jun 06, 2023 2:45PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Antha sollu
EL LA
EL LA Jun 06, 2023 2:40PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
NRGU and NRGD both green, lol. Eventually, words can't fuel the reality and the truth will out.
Kerry Ditto
Kerry Ditto Jun 06, 2023 12:17PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
probably massive bankruptcy would happen to small firms due to a lack of AI automation and high labor intensive costs.
Kerry Ditto
Kerry Ditto Jun 06, 2023 12:05PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
falling oil prices suggest recession coming. it's up to fed if recession can be preventable. odds are 50 50.
Pradeep Singh Bisht
Pradeep Singh Bisht Jun 06, 2023 8:40AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
poor Saudi .. desperate to uplift oil 🛢️ now less output less money
Tre Hsi
Tre Hsi Jun 06, 2023 8:40AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
hahaha, couldn't have happened to nicer people like the Saudi royalties and Putin.....
Rubbing Hands
Rubbing Hands Jun 06, 2023 5:08AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Services grew a good amount and PMI going down should be taken as positive. meanwhile oil output is not growing. Funny how recession only affects oil.
Ndrew Wen
Ndrew Wen Jun 06, 2023 2:32AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Above "recession such Germany" bottom "Europe doing fine". Which one do you mean? tik-toking news?
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email