Crude Prices Retreat Below $100 Threshold
March 16, 2022
WTI oil prices have retreated to below $100 dollars per barrel, having lost more than $30 dollars in a little more than one week. Prices have officially entered a bear market after reaching 14-year highs. A bear market is when prices fall by 20% within a short time frame after recently reaching highs. The biggest factor pushing prices lower is the fact that Russian energy flows have not been stopped. As we have mentioned China and India continue to buy discounted Russian crude oil. Bloomberg reports that Italy will need 3 years to replace the natural gas it buys from Russia.
The more positive outlook for getting barrels of crude oil from Iran and Venezuela potentially in the near future is also pressuring prices.
The API released their inventory update and it called crude oil inventories up 3.8 million barrels, gasoline down 3.8 million barrels, and distillate stocks up 888,000 barrels.
An outbreak of covid in China is also reminding the market that there are things that can negatively impact demand and the potential list of factors is long currently. Bloomberg reports that 45 million people are in some form of lockdown in China right now.
The Federal Reserve concludes their two-day meeting today and everyone thinks that they will raise the rate by 25 points for the first time since 2018.
The average estimate for today’s update on propane inventory is for there to be a draw of 1.45 million barrels.
The Wall Street Journal reports that Saudi Arabia is in active talks with Beijing to price some of its oil sales to China in yuan. This would not be a positive for the US dollar as it is currently the global currency for crude oil trading and sales.