Myra P. Saefong and William Watts, MarketWatch
SAN FRANCISCO/NEW YORK
EnergiesNet.com 03 23 2023
Oil futures finished lower on Thursday for the first time in four sessions, as traders weighed the prospects for an economic recession a day after the Federal Reserve delivered an interest rate hike and signaled at least one more increase this year.
Price action
- West Texas Intermediate crude for May delivery CL00, -0.66% CL.1, -0.67% CLK23, -0.67% fell 94 cents, or 1.3%, to settle at $69.96 a barrel on the New York Mercantile Exchange. Prices for the front-month contract posted a third-consecutive gain on Wednesday to settle at $70.90, the highest since March 14.
- May Brent crude BRN00, -0.46% BRNK23, -0.42% lost 78 cents, or 1%, at $75.91 a barrel on ICE Futures Europe.
- Back on Nymex, April gasoline RBJ23, -0.43% climbed by 0.5% to $2.6059 a gallon.
- April heating oil HOJ23, -0.10% lost 2% to $2.6847 a gallon.
- April natural gas NGJ23, -0.14% declined by 0.8% to $2.154 per million British thermal units.
Market drivers
Crude prices ended higher Wednesday after the Federal Reserve delivered a quarter-point rate hike, as expected. The Fed’s forecast showed policy makers expect just one more rate increase this year.
Oil prices on Thursday gave up early gains to finish with a loss, but remained higher week to date.
“The oil market became oversold last week and futures fell into key support that was also a key downside technical target near $66 [a] barrel,” analysts at Sevens Report Research wrote in Thursday’s newsletter. “That opened the door to a rebound this week.”
Wednesday’s “bullish-leaning” data from the Energy Information Administration and “dovishly interpreted Fed served as a dual-pronged catalyst for the bounce in futures to continue,” they said. The EIA on Wednesday reported a 1.1 million-barrel rise in last week’s U.S. crude inventories, along with a 6.4 million-barrel drop in gasoline stockpiles.
Read: Why retail diesel prices may soon fall below $4 a gallon
Crude bounced back since tumbling last week to a 15-month low on fears that trouble in the banking sector could lead to a significant economic downturn. WTI and Brent futures settled Wednesday at their highest since March 14.
“The banks are the main driver of oil…as fading confidence in the financial system is reigniting fears that another crisis may be looming….”— Tyler Richey, Sevens Report Research
However, “the banks are the main driver of oil, and really all risk assets [Thursday], as fading confidence in the financial system is reigniting fears that another crisis may be looming, after we saw some of the biggest bank failures since 2008 in early March,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch.
There’s “potential for a continued relief rally into the mid $70s for WTI in the near term, but still bearish risks for energy broadly over the longer term,” he said.
U.S. government data Thursday showed at the number of Americans who applied for unemployment benefits last week slipped to a three-week low of 191,000, showing that the labor market remains strong. Even so, the number of raw or actual claims — before seasonal adjustments — was much higher last week compared to the same week a year earlier.
Natural-gas futures, meanwhile, ended lower on Thursday, extending Wednesday’s 7.5% decline.
The EIA on Thursday reported that domestic natural-gas supplies fell by 72 billion cubic feet for the week ended March 17. That nearly matched the average analyst forecast for a decline of 71 billion cubic feet, based on a survey conducted by S&P Global Commodity Insights.
marketwatch 03 23 2023
