Monday , January 30 2023

A new decline in oil prices. Main :: Economy :: RBC


The world oil prices dropped by about 7% a week earlier. Traders are afraid of duplication of the scenario when oil prices drop by 33% in November and December 2014

Photo: Christian Hartmann / Reuters

  • Oil futures price down to $ 4.43 in London on Tuesday, up $ 62.53 per barrel on the ICE Futures exchange. American WTI futures price fell by $ 3 per barrel, 77 (-6.6%) and in the daytime it was $ 53.43.
  • In the course of trades, the Brent price fell by 7.6% to $ 61.71 – the lowest level since December 2017.
  • From the beginning of October Brent prices dropped by 28%, WTI – by 30%.

What was that?

  • The reason for the new decline in oil prices is the fact that the investors' refusal from risky assets is primarily stock. US funds fell by 1.7-2.2%, and now Dow and S & P are 1% lower than at the beginning of the year.
  • The past two months have failed for the US stock market: investors are expecting interest rates, and in 2019 expected to worsen corporate income within the US-China trade war. The largest US technology companies known for their acronym FAANG (Facebook, Apple, Amazon, Netflix, Google) recently lost $ 1 trillion at market value.
  • Global markets do not feel good: global stock market capitalization exceeded $ 8 trillion last month The dollar has dropped – players are afraid of a slowdown in global economic growth.

"If the stock market loses 8-9%, the weaker world economy will be the image that will be weaker than expected oil demand," said Ritherberg's President Jim Riterbush.

  • The catalyst for oil prices fell on Tuesday after the US president's recent statement on bilateral relations between the United States and Saudi Arabia following the assassination of Saudi journalist Jamal Hashqadze. Recently, American media has found Saudi Arabia's Mohammed bin Salman to be the partner of Saudi Arabia with the United States, despite the fact that Al Saud ordered the murder of a journalist in Istanbul, though Tramp Hashidji's death.
  • The risk of geopolitical friction between Riyadh and Washington was a factor supporting oil prices, but Trump's statement dropped this factor.
  • "Saudi Arabia is the world's largest oil producer after the United States. They work closely with us and feel the problem of keeping oil prices at reasonable prices, "Trump said, after the assassination of Hashqadji, the United States' anti-Semitic attitude to guarantee the promise of Saudi Arabia. Reduction of oil production in December at OPEC.

Investors are now afraid of the recurrence of the 2014 scenario (after that, oil prices declined by 33% in November and December), Bloomberg reports. Four years ago, the market was preparing to reduce oil production to support OPEC's quotations, but decided to delay the cartel. At a November OPEC meeting, oil prices dropped by 10%, after a month the decline reached 25%. In 2015, oil prices fell below $ 40 per barrel.

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