06/21 Closing Prices / revised 06/21/2024 21:59 GMT |    06/20 OPEC Basket   $85.68  +$0.14 cents 06/21 Mexico Basket (MME)  $76.19  -$0.28  cents | 05/31 Venezuela Basket (Merey)  $70 45   -$4.36 cents | 06/21 NYMEX WTI Texas Intermediate July CLN24 $80.73  -$0.56 cents  | 06/21 ICE Brent August  BRNQ24 $85.24  -$0.47 cents  | 06/21 NYMEX Gasoline July RBN24 $2.51  +0.5%  |  06/21 NYMEX  Heating Oil July  RBN 24   $2.49  -1.3% | 06/21 Natural Gas July NGN24  $2.71   -1.3%  | 06/21 Active U.S. Rig Count (Oil & Gas)   588  -2  | 06/21 USD/MXN Mexican Peso   18.1130 (data live)  | 06/21 EUR/USD   1.0693  (data live)  | 06/25 US/Bs. (Bolivar)   $36.37250000 (data BCV)

Oil prices fall Tuesday to begin 2023 as China worries persist

WTI oil futures settle at a 2-week low

Oil pump Jack
Joe Raedle/Getty Images

William Watts, MarketWatch

EnergiesNet.com 01 03 2023

Oil futures on Tuesday kicked off the new year with sharp losses, as growing concerns over a global recession and worries that surging COVID-19 cases in China will crimp demand from one of the world’s largest energy consumers pulled U.S. benchmark prices to their lowest finish in two weeks.

Traders returned from a three-day weekend. U.S. and U.K. markets were closed Monday in observance of Sunday’s New Year’s Day holiday. The U.S. crude oil benchmark rose 6.7% in 2022, based on front-month contracts, according to Dow Jones Market data, while Brent crude, the global benchmark, rose 10.5%.

Price action

  • West Texas Intermediate crude for February delivery CL00, -1.98%   CL.1, -1.98%   CLG23, -1.95% fell $3.33, or nearly 4.2%, to settle at $76.93 a barrel on the New York Mercantile Exchange, with front-month prices marking the lowest settlement since Dec. 20, according to Dow Jones Market Data.

  • March Brent crude BRN00, -2.01%   BRNH23, -2.03% lost $3.81, or 4.4%, at $82.10 a barrel on ICE Futures Europe, the lowest settlement since Dec. 22.

  • On Nymex, February gasoline RBG23, -2.30% fell 4.7% to $2.3612 a gallon.

  • February heating oil HOG23, -2.37% declined by 6.3% to $3.0865 a gallon.

  • February natural gas NGG23, 0.18% dropped 10.9% to $3.988 per million British thermal units, the lowest settlement since February.

Market drivers

The drop for oil prices Tuesday came as recession fears mount, with the International Monetary Fund expecting one-third of the world economy to enter a recession, while New York Fed President William Dudley says a U.S. economic downturn is likely.

Kristalina Georgieva, head of the International Monetary Fund, said on the CBS Sunday morning news program “Face the Nation” that the IMF expects one-third of the world economy to be in recession this year. The IMF currently projects a global growth rate of 2.7% in 2023, slowing from 3.2% in 2022.

Read: ‘Recession is what everyone is betting on’: 2023’s first trading day begins

All this doesn’t really make investors feel good about the oil demand outlook, Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch.

Crude oil had ended 2022 on a positive note, rising in Friday’s session. Investors have weighed optimism over the lifting of China’s strict COVID curbs, which were seen keeping a lid on demand from one of the world’s largest energy consumers, versus concerns over soaring infections.

Flynn expects China’s reopening to add to oil demand — gaining momentum as the year goes on.

“Seasonally and fundamentally, we should be buying breaks even as recession fears mount,” he wrote in a Tuesday report. “China’s demand growth should offset the recession demand impact. This could be a big year for oil.”

On Tuesday, however, China’s official manufacturing PMI reading fell more than expected, to 47.0, in December, the lowest level since February 2020.

“The December survey data out of China were uniformly downbeat. The plunge in the official services PMI points to a fall in oil demand, but we suspect that the hit to industrial activity (and metals demand) has been more modest,” said Caroline Bain, chief commodities economist at Capital Economics, in a note.

A private gauge of activity in China’s manufacturing sector released Tuesday was in contractionary territory for a fifth straight month in December, as waves of infections disrupted businesses and undercut demand. China’s Caixin manufacturing purchasing managers index dropped to 49.0 in December from 49.4 in November, according to data released Tuesday by Caixin Media Co. and S&P Global. A figure below 50 marks a contraction in activity.

“Looking ahead, we expect China’s commodity demand to remain soft in Q1 given the ongoing downturn in the property sector, the wave of virus infections and sluggish export demand,” Bain said.

Natural-gas futures, meanwhile, fell by nearly 11% Tuesday. The National Oceanic and Atmospheric Administration predicts warmer-than-normal temperatures across the entire lower 48 states through Jan. 16, which is expected to “reduce heating demand and drive looser market balances,” said Christin Kelley senior commodity analyst at Schneider Electric, in a daily report.

Weekly data on U.S. natural-gas supplies will be released by the Energy Information Administration, as usual, on Thursday morning. The weekly EIA report on petroleum supplies will also released Thursday, a day later than usual because of Monday’s New Year holiday.

marketwatch.com 01 03 2023

Share this news

Support EnergiesNet.com

By Elio Ohep · Launched in 1999 under Petroleumworld.com

Information & News on Latin America’s Energy, Oil, Gas, Renewables, Climate, Technology, Politics and Social issues

Contact : editor@petroleuworld.com

CopyRight©1999-2021, EnergiesNet.com™  / Elio Ohep – All rights reserved

This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission fromPetroleumworld or the copyright owner of the material.

Scroll to Top