(London) Oil prices were still stagnating on Friday, caught in the headwinds of a market that is expected to tighten sharply in the coming months with production cuts in exporting countries, and fears of recession on the consumer side.
By 5:30 a.m. EST, a barrel of Brent North Sea crude for June delivery was up 0.22% at $86.28.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in May, gained 0.24% to 82.36 dollars.
“Recession scare rhetoric” is once again taking center stage, says PVM Energy analyst Stephen Brennock.
The International Monetary Fund (IMF) slightly lowered its global growth forecast for 2023 earlier this week.
In the minutes of the last monetary meeting of the United States Federal Reserve (Fed) in March, the institution’s economists also estimated that the recent banking difficulties “could lead to a mild recession” this year in the United States.
The latest monthly report from the Organization of the Petroleum Exporting Countries (OPEC), released on Thursday, finally “echoed this difficult outlook”, notes Mr. Brennock, highlighting in particular “high inflation and the tightening monetary”.
But the alliance has paradoxically maintained its forecast for demand, which is expected to increase by 2.3 million barrels per day in 2023 compared to last year to reach 101.9 million barrels on average.
“OPEC expects a severely undersupplied market in the second half of 2023, but reduces production from May,” DNB analysts point out, recalling that eight members of the OPEC group decided at the beginning April to cut their crude production by more than a million barrels a day as of May, in addition to the cuts already announced by Russia.
But the looming rough shortage does not appear to be enough to support prices, Exinity’s Han Tan insisted, arguing that “markets must continually receive signs that global demand remains resilient” to offset recession fears.
