Fuel Cost fall in Global Market
The cost of fuel oil has once more somewhat fallen on the global market. After climbing 0.8 percent on Friday, Brent crude was down 20 cents, or 0.3 percent, at $75.21 a barrel in Asian markets on Monday morning.
Furthermore, the cost of US Texas Intermediate Crude dropped by 0.3% to $70.41 per barrel. This crude oil’s price increased by 1.1% from the day before.
Reuters reports that despite production cuts by OPEC and its allies to raise oil prices, the price of fuel oil decreased marginally as a result of several macroeconomic challenges and the potential for an increase in US Federal Reserve policy interest rates. There is a chance that GDP will decelerate if the Fed hikes rates.
Through June, Brent crude prices decreased for the fourth consecutive quarter. WTI crude’s price fell in tandem with this during the course of two quarters. The world’s two largest economies, the United States and China, experienced a decline in fuel costs in the second quarter of the year as a result of the global economy losing speed and people becoming more concerned about it.
Since last year, the Federal Reserve and other central banks across the world have tried to combat inflation by hiking interest rates. The inflation rate has somewhat decreased as a result. However, because that nation’s inflation rate continues to be higher than the Federal Reserve’s 2 percent target, there is a possibility that the Fed would increase policy rates once again.
There has been a lot of bullish commentary on policy rates, according to a note from the National Australia Bank. The price of fuel oil is falling as a result of the concern over global economic demand that has been generated.
A rise in policy interest rates might make the US dollar even more powerful. As a result, the demand for oil may decline if the import costs of the importing countries rise. In a Reuters poll conducted in June of last year, economists and analysts predicted that Brent crude oil prices would average $83.03 per barrel.
But Saudi Arabia is frantically trying to drive up oil prices. Saudi Arabia has announced a further 1 million barrel reduction in oil production on top of OPEC’s previously planned production cut. It will go into effect in July. American strategic oil reserves are being replenished. These factors may cause an increase in oil prices in the second half of the year.
According to the most recent Reuters poll, even though OPEC announced it would reduce oil production, the organization’s output actually increased in June due to higher oil production in Iraq and Nigeria. Investors in this situation are anticipating the OPEC meeting later this week.
The number of American oil rigs now producing has decreased by another week to 545, its lowest level since April 2022. Six more gas fields were added, bringing the total to 124, the fewest since February 2022.
According to the U.S. Energy Information Administration, U.S. The lowest level since February, crude oil production fell to 12.61 million barrels per day in April.
Sources: BBC News