TELF AG analyzes Oil Price Update September 7, 2023
An upward movement
In late August 2023, oil prices witnessed an upward movement after China initiated measures to strengthen its weakening economy. This move from China was marked by a 50% reduction in stamp duty on stock trading, an effort to invigorate its faltering markets.
Despite the positive news from China, concerns persisted in the investor community. There have been apprehensions about the overall pace of growth and potential U.S. interest rate hikes, which might affect demand adversely.
Another factor that the market is closely monitoring is the start of hurricane season in the Gulf Coast of the United States. Its potential impact on the oil and gas production in the U.S. Gulf is being watched with keen interest. As we enter the season of hurricanes and tropical storm activity in the Atlantic, there’s potential for impacts on the US Gulf Coast (USGC). Current models indicate heightened storm activity. While the risk of a hurricane directly impacting the US Gulf Coast remains minimal, the area isn’t completely devoid of threats.
Harold, a recent hurricane, made its presence known in Texas. As it dissipates, there are reports suggesting it may have affected some LNG terminals, though this information remains unconfirmed. In contrast, Hurricane Franklin is not expected to threaten the USGC.
At the beginning of the last week of August, Brent crude’s price had increased by 21 cents, marking a 0.3% rise, reaching $84.69 a barrel. Notably, the session touched a high of over $85. Meanwhile, U.S. West Texas Intermediate crude grew at 43 cents, representing a 0.6% increase, and was priced at $80.27.
Ole Hansen, the head of commodity strategy at Saxo Bank, highlighted the significant factors for the week: China’s efforts to back its economy, the anticipated trajectory of Tropical Storm Idalia, and the prospects of Brent crude prices potentially surpassing the $85 mark. Jumping ahead, on Thursday, Sept 7, 2023, oil prices showed a downward trend. An uncertain economic projection for China appears to have had a greater influence than anticipated tighter supplies due to prolonged supply cuts in Saudi Arabia.
Brent crude futures experienced a decrease, falling 18 cents, or 0.2%, landing at $90.42 a barrel by 1323 GMT. In a similar vein, U.S. West Texas Intermediate crude (WTI) futures also declined by 21 cents, marking a 0.2% drop, to stand at $87.33.
