Oil has its worst week since April

Oil closed lower in volatile trading on Friday with both US West Texas Intermediate (WTI) and European North Sea Brent suffering their biggest weekly falls since early April as mounting recession fears overturned any concerns in around supply after weak economic data from China, Europe and the United States.

In the week that just ended, WTI lost 11.20%, while Brent fell 11.07% and Mexican crude fell 13.54 percent. The price of the Mexican export mix also had its worst week since April.

In the week that ended on April 1 of this year, just over a month after the Russian invasion of Ukraine, the price of WTI fell 12.84%, that of Brent lost 13.48% and that of the Mexican mix fell 12.35 percent. .

Since its maximum level on March 8, the WTI has lost 42.59%, the Brent has fallen 40.54% and the Mexican crude decreases 49.49 percent.

WTI crude oil futures settled down 44 cents, or 0.62%, at $71.02 a barrel on Friday, hitting a new low for the year. Brent crude finished the day down 5 cents, or 0.07%, at $76.10 a barrel and Mexican blend lost 44 cents, or 0.72%, at $60.42 a barrel.

“Any supply concerns are secondary to concerns about the economy,” Mizuho analyst Robert Yawger said.

Oil prices had found some support last Friday and rose more than 1% earlier in the session after Russian President Vladimir Putin said the world’s biggest energy exporter may cut output in response to a cap. price on their crude oil shipments.

However, a slightly higher-than-expected rise in US producer prices in November and news of a partial restart of the Keystone pipeline wiped out those gains and helped WTI and Brent prices.

Keystone closed earlier this week after a 14,000-barrel oil leak in Kansas.

The US Producer Price Index rose slightly more than expected in November amid rising utility costs, according to a Labor Department report.

The market structure for Brent contracts has changed to contango, which means that contracts for short-term delivery are cheaper than those for six-month delivery, indicating that traders see weaker demand.

seek stability

The OPEC+ alliance plays a critical role in supporting market stability, OPEC Secretary General Haitham Al Ghais said on the sixth anniversary of the group’s formation.

“Six years later, the framework continues to play a critical role in supporting market stability, which is essential for growth and development, as well as attracting the investment needed to ensure energy security,” Al Ghais said in a statement. .

OPEC+, which brings together the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, last met on December 4.

volatile week

Gabriela Siller, director of Analysis at Banco Base, said that last week was characterized “by a wide volatility for WTI that reached an intraday maximum of 82.72 dollars and a minimum of 70.08 dollars per barrel, not seen since December 2021.”

He explained that the pressures are due to concerns about their demand with the possibility that some of the main economies of the world fall into recession.

“We must remember that China’s manufacturing and service activity has reached its lowest level since May. Likewise, caution continues to be observed in the market awaiting the Federal Reserve’s monetary policy decision on December 14,” he commented.

The US Energy Information Administration (EIA) reported that inventories of distillates and gasoline increased last week, a period where they are typically reduced, indicating weaker demand.

According to the EIA, distillate stocks increased by 6.2 million barrels, beating estimates of an increase of 2.2 million. Gasoline inventories rose 5.3 million barrels, versus expectations for a 2.7 million-barrel build. This offsets the reduction of 5.2 million barrels in crude oil reserves.

The expert said that going forward “it is not ruled out that the volatility in the price of oil continues, since the risks regarding supply and demand will continue.”

The market will monitor the weather, which may deteriorate if cold fronts are observed in the northern hemisphere, while oil inventories in the United States may decrease, Siller explained.

“Normally at the end of the year, oil companies in the United States send part of their inventories to the high seas to reduce their tax burden at the end of the year,” he commented. (With agency information)

termometro.economico@eleconomista.mx