A stronger dollar and the director of the International Monetary Fund’s warning of a harsher 2023 as global countries endure less activity caused oil prices to decline on Tuesday from their highest levels in a month. Brent crude futures dropped 98 cents, or 1.1%, to $84.93 a barrel by 0148 GMT while U.S. West Texas Intermediate crude was at $79.49 a barrel, down 77 cents, or 1.0%, after the U.S. dollar strengthened. A stronger greenback makes dollar-denominated commodities more expensive for holders of other currencies.
IMF Managing Director Kristalina Georgieva said on Sunday that the United States, Europe and China – the main engines of global growth – are all slowing down simultaneously, making 2023 tougher than 2022 for the global economy. Still, oil prices settled more than 2% higher on Friday with Brent and WTI closing 2022 up 10.5% and 6.7%, respectively.
Commodities saw a substantial $12.3 billion bullish flow in the week that ended on Dec. 27, the single largest weekly bullish flow in 2022, Societe Generale analysts said in a Jan. 3 note. “The commodity with the largest flow was Brent, which saw a $3.4 billion bullish flow as Russia outlined its response to the EU and G7 imposed price cap on the country’s crude exports to third parties,” the analysts said.
President Vladimir Putin banned the supply of crude and oil products from Feb. 1 for five months to nations that abide by the cap in a decree, which also included a clause that allows for Putin to overrule the ban in special cases. Russian crude has been diverted to India and China from Europe while Moscow planned to increase diesel exports from the Baltic sea port of Primorsk to 1.81 million tonnes in January. However, January oil products exports from Tuapse is expected to fall to 1.333 million tonnes, traders said.
A Reuters oil price poll showed that Brent prices are expected to average at $89.37 a barrel in 2023 while the average for WTI is at $84.84 a barrel as global economic growth slows.In China, the second-largest oil consumer and the world’s largest importer of crude, some people braved the cold and an increase in COVID-19 infections to resume their regular activities on Monday, raising the possibility of an economic recovery and an increase in oil demand as more people recover from infection.
