On Wednesday (January 4), international oil prices continued to fall, hitting a new low in a week and a half, dragged down by concerns that the global economic recession may lead to weak demand, while supply remained relatively sufficient. NYMEX crude oil looked at $74.44.
At 16:06 Beijing time, NYMEX crude oil futures fell 1.27% to $75.95/barrel; ICE Brent crude futures fell 1.19% to $81.13/barrel.
Concerns about weak demand continued to loom over the market. Top oil exporter Saudi Arabia is likely to cut its flagship Arabian Light crude price for Asian customers further by around $1.50 a barrel in February, on track to hit a new low since November 2021 and just above the average Oman/Dubai crude price About $1.75/barrel.
The official selling price of Saudi crude oil is usually released around the 5th of each month and provides a reference for oil prices in countries such as Iran, Kuwait and Iraq, affecting the price of crude oil shipped to Asia by about 9 million barrels per day.
Russia has shifted its oil exports from Europe to Asia after the European Union banned imports of Russian crude by sea from Dec. 5. Meanwhile the Group of Seven (G7) countries have introduced price caps that limit Russia’s use of Western finance for oil trade, shipping and insurance services.
While Moscow last week announced a ban on crude oil sales to countries adhering to price caps, its main oil customers in Asia will not be affected and more Russian barrels are expected to flow to Asia.
The market is still worried about the impact of macro factors such as economic downward pressure. The head of the International Monetary Fund has previously warned that economies across much of the world will have a tough year in 2023 as the main engines of global growth experience weaker economic activity.
After raising interest rates four times in a row by 75 basis points, the Fed cut its rate hike to 50 basis points in December. If the Fed ramps up its rate hikes, it could slow economic growth and dampen fuel demand.
On the daily chart, NYMEX crude oil fell below $77.13 and is expected to further test $75.79 and $74.44, which are the 38.2%, 50% and 61.8% Fibonacci retracement levels of the upward range of $70.10-81.48 respectively.