(New York) Oil prices fell sharply on Monday, still under the influence of a series of disappointing indicators, which raised fears of a weakening in demand, while the market doubts of a contraction in supply.
The price of a barrel of Brent North Sea oil for August delivery fell 3.94% to close at $71.84.
Its American equivalent, the West Texas Intermediate (WTI) with maturity in July, lost 4.34% to 67.12 dollars. In the session, the WTI benchmark price fell as low as $66.80, a six-week low.
“Prices were rocked by concern over the slowdown in the physical market,” that is, the actual movement of black gold around the world, due to anemic demand, explained Phil Flynn, of Price Futures Group.
Eyes are particularly focused on China, the world’s largest importer of crude oil, “where we see signs of structural weakness in demand”, illustrated by the deceleration in car sales, analysts said in a note. ‘Eurasia Group.
For Susannah Streeter, of Hargreaves Lansdown, operators fear the delayed effect of the brutal rate hikes recorded for a year, which are only reflected, for the moment, only moderately in the major Western economies.
As for the offer, “there are a lot of rumors about the lifting of sanctions against Iran and Venezuela,” Phil Flynn points out.
An article by the British information site on the Middle East Middle East Eye had reported on Thursday, progress in the discussions between Iran and the United States on the Iranian nuclear, information firmly denied by the White House.
According to figures cited by Eurasia Group, the Islamic republic exported some 1.5 million barrels a day in May, compared to an average of around one million last year.
These Iranian data as well as the maintenance of Russian exports at a very high level prompted Goldman Sachs analysts to lower their price estimate again, to 86 dollars at the end of 2023, against 95 so far.
Although these Iranian volumes “may not be sustained” in the medium term, Eurasia Group believes, “they could mitigate production cuts by OPEC”, the cartel made up of the Organization of the Petroleum Exporting Countries (OPEC) and of their allies in the agreement signed in 2016.
Regarding OPEC, “there are questions about whether Saudi Arabia will actually cut production” by one million barrels in July, as it announced in early June, according to Phil Flynn.
Still on the supply side, prices took a hit from the publication of the US Energy Information Agency (EIA), which forecasts that shale oil production will hit a record high in July in the United States.