Price pressures continue Petroleum which in the last five months has lost more than 37%, thus passing from 124 dollars a barrel in mid-June to the current $78. This decline was driven by a combination of factors including a increasingly weak demand which is opposed to aoffer that remains soliddespite the blockade of crude oil imports from Russia.
Recessionary fears are sinking oil prices
It must be considered that the current context is characterized by multiple uncertainties (inflation, interest rate hikes, war in Ukraine, pandemic) and at the moment most operators are focused on fears of a global recession, which according to the opinion of many analysts could already occur in the first quarters of 2023. For this reason, operators in the oil market continue to watch theevolution of the situation in China and the United Statesthe top two energy consumers in the world.
From this point of view, the continued weakening of the American economy and the continuation of China’s zero-covid policy are having a severe blow on oil demand, which this year will be lower than that required in 2021.
But how are raw materials moving?
Last week the Bloomberg Commodity Indexthe index that tracks the prices of a basket of 23 commodities, recorded a 2.4% drop, the most marked weekly drop for about 2 months. However, as can be seen from the histogram graph shown above, the week was actually positive or neutral for most commodities, with the decline in the index mainly attributable to the collapse of energy assets which overall lost – 7.4%.
Notably, the sales hit oil again, with the Brent (European benchmark) than in the last week lost more than 11%, in the wake of growing fears related to demand. However, as analysts at MPS Capital Services note, “for the moment, the fear of further production cuts by OPEC+ has disappeared, even though Putin threatened on Friday that the cuts in Russian production could be a consequence of the launch of the price cap and that, in the next few days, it will an official decision.
From the point of view oftechnical analysisBrent confirmed the breakout of both the last week static support at 83.65 dollars per barrel than of that a 77 $/bwith confirmation of the downward breakout of
bullish trendline built after the rise in March (dashed black line on the weekly chart). From the point of view of algorithmic analysis, the oscillator Stochastic is heavily oversoldwhich could trigger a short-term technical rebound, even if the confirmation of Friday’s prices below 77 $/b (which has now become the main reference resistance level) could open the space for a descent towards the static support at 69, 28 $/bb.
On the contrary, in the past week it is the price of TTF gas has risen which achieved a performance of +2.6% and this in the wake of the cold wave which is especially affecting Northern Europe, which is increasing fears about the availability of supply during the winter. Despite the recent increase, a certain weakness on TTF gas has returned in recent sessions and this because in Europe imports of liquefied natural gas (LNG), are at record levels and this is limiting the decline in inventories which are still well above the average for the period.
In the last week, the best performing sector was that of industrial metals which achieved an increase of 1%, in the wake of the announcements of easing of the measures related to the management of the Covid. Aluminum goes against the trend (- 2.8%) on which the expectations of a transition to a global production surplus in 2023 weigh.