(BFM Bourse) – Oil stocks fell this Thursday, pulled down After the drop in black gold prices. The prices of the two global oil benchmarks fell to one and a half month lows.
After gaining strength in recent weeks with the resurgence of tensions in the Middle East, oil prices fell violently on Wednesday in reaction to the latest weekly report from the American Energy Information Agency (IEA).
According to this report published Wednesday, American commercial crude oil stocks jumped more than expected, by 7.3 million barrels, last week, where analysts expected a smaller increase, of 2.5 million barrels. These stocks have never been so high since June 2023, also points out the IEA.
“Concerns about demand were highlighted by oil traders as IEA data showed a rise in crude inventories and Fed Chairman Powell suggested delaying the start of the easing cycle,” notes Charu Chanana, head of foreign exchange strategy at Saxo Capital Markets Pte, cited by Bloomberg.
On Wednesday, the July contract on a barrel of Brent from the North Sea lost 3.4% to return to 83 dollars when the barrel of WTI listed in New York fell by 3.6% and returned below 80 dollars, at $79. They are now at one and a half month lows.
“The United States will increase its strategic reserves”
Oil and oil stocks are therefore losing ground, in reaction to the fall the day before when the Paris Stock Exchange was closed on Wednesday. Heavyweight on the Parisian coast, Totalenergies returns 2.8% to 66.66 euros. Technipenergies fell by 3.4% despite first quarter results in line with expectations, while Vallourec lost 2%.
However, oil prices are regaining some color this Thursday. The July contract on a barrel of Brent from the North Sea increased by 0.9% to 84.2 dollars when the barrel of WTI listed in New York rose 0.8% to 79.61 dollars.
The sharp drop in WTI prices below $80 is fueling speculation that the United States could seize this opportunity to replenish its strategic oil reserves, reports Reuters.
“The oil market has been supported by speculation that if WTI falls below $79, the United States will increase its strategic reserves,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, cited by Reuters.
An eroding geopolitical premium
Despite today’s rise, oil contracts have lost 4% since the start of the week. This decline even amounts to 8.6% for Brent and 8.9% for WTI compared to their peaks reached in April. Since then, the geopolitical premium has recently eroded with hopes of a ceasefire agreement between Israel and Hamas.
Furthermore, the Organization of the Petroleum Exporting Countries (OPEC) is struggling to enforce the production cuts decided last March. Iraq and the United Arab Emirates continue to extract several hundred thousand barrels per day beyond agreed limits, a Bloomberg investigation reports.
The entry into service of the new Trans Mountain oil pipeline, in western Canada, this Wednesday will also lead to an increase in the supply of black gold on the market.
Sabrina Sadgui – ©2024 BFM Bourse
