Recovery after the sharp drop in oil
While oil futures followed a fluctuating course with the return of Chinese investors, it first saw its lowest level since December 2021 with a chaotic opening, then rose and erased its losses.
U.S. crude futures slumped as much as 7.2 percent in the early hours on concerns that a potential U.S. recession would hurt demand, but later rebounded.
Vandana Hari, Founder of consulting firm Vanda Insights, referred to the sales, and said, “The drop was unmistakably panic selling, backed by algorithmic trading.”
Other market watchers pointed out that the initial slump may have been due to an investor pressing the wrong button or speculators giving up their investments in the uptrend.
Oil has slumped 14 percent this year, indicating that the OPEC+ countries’ plan to cut production this month and regain control of the market has not yet worked.
It is evaluated that the declines may be due to concerns that global growth is slowing and could potentially harm energy demand.
ANZ Group Holdings analysts Brian Martin and Daniel Hynes said in a passing note, “Concerns about weakening economic growth in major economies have put commodities under further downward pressure. “The oil market mood is likely to continue its downward trend,” he said.
A government report released Wednesday in the US showed that demand for gasoline was falling and fuel supply was increasing. Jet fuel demand also fell, just above the previous year.
Despite Russia’s promise to reduce supply and the web of Western sanctions imposed after the invasion of Ukraine, evidence that flows from Russia were more resilient than expected also put oil under pressure in 2023.
U.S. crude oil for June delivery was up 0.8 percent at $69.17.
Brent oil for July delivery rose 1.1 percent to trade at $73.12.