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Market news: Microsoft (MSFT.O) is replacing OpenAI and Anthropic models with its own AI models in some applications.On July 8th, the U.S. Energy Information Administration (EIA) released its Short-Term Energy Outlook report, which stated that it expects U.S. power sector natural gas consumption to reach a record high next year, driven primarily by rising overall electricity demand, expansion of natural gas generating capacity, and relatively low natural gas prices. The report forecasts a slight increase in natural gas demand across the economy this year, followed by a 3% increase in 2027. It predicts that wholesale electricity prices this summer will be lower than last summer, primarily due to lower natural gas costs delivered to power plants—however, summer heat waves could still cause prices to surge. Nationally, wholesale electricity prices are expected to average around $45 per megawatt-hour, with the largest price drops expected in western hub regions.On July 8th, the U.S. Energy Information Administration (EIA) released its Short-Term Energy Outlook report, stating that it forecasts gasoline prices to average $3.80 per gallon in the third quarter of 2026, down from over $4.20 per gallon in the second quarter. It expects retail prices to fall to around $3.40 per gallon in the fourth quarter of 2026. The EIA forecasts that the average annual retail gasoline price will fall below $3.10 per gallon in 2027.On July 8th, the U.S. Energy Information Administration (EIA) released its Short-Term Energy Outlook report, stating that increased oil production and the recovery of trade flows will lead to lower-than-expected crude oil inventory depletion in the coming months. We project a 2.2 million barrel per day (bpd) decrease in global oil inventories in the third quarter of 2026, compared to our June forecast of over 7 million bpd, and a 5 million bpd decrease in the second quarter of 2026. Next year, we expect rising oil production to return the market to a pre-conflict oversupply state.On July 8th, the U.S. Energy Information Administration (EIA) released its Short-Term Energy Outlook report, noting that on June 18th, the U.S. and Iran signed a memorandum of understanding to end the conflict and open the Strait of Hormuz. With the signing of the agreement and increased traffic through the strait, we have raised our forecast for global oil production for the remainder of this year. We now expect most crude oil production to recover to near pre-conflict levels by the end of this year, and most of the shut-down crude oil production to come online in the first quarter of 2027.

As Fed Worries Mount, Oil Prices Fall And Are on Course For Weekly Losses

Skylar Williams

Feb 17, 2023 11:48

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Concerns over increasing U.S. interest rates and a strong currency mostly overshadowed optimism on a potential recovery in Chinese demand, which led to a modest decline in oil prices on Friday and a projected weekly loss.


The U.S. producer price index inflation for January was higher than anticipated, after a report on the consumer price index that suggested inflation will likely continue tenacious in the world's largest economy.


The findings, along with harsh overnight comments from Federal Reserve officials, indicated further interest rate rises in the coming months, which investors fear will stifle economic growth and weigh on petroleum consumption this year.


Around 21:13 ET, Brent oil prices decreased 0.1% to $84.55 per barrel, while West Texas Intermediate crude futures decreased 0.7% to $77.97 per barrel (02:13 GMT). This week, both futures were expected to lose between 1.5% and 2%.


Overnight, the dollar appreciated as Fed governors James Bullard and Loretta Mester advocated for more rate rises by the central bank, which impacted on petroleum prices. The dollar's strength raises the price of petroleum for overseas customers, hence diminishing global oil demand.


The Biden Administration's anticipated sale of 26 million barrels of petroleum from the Strategic Petroleum Reserve also weighed on oil prices earlier this week. This, along with statistics indicating a far larger-than-anticipated increase in U.S. oil stockpiles, suggested an imminent U.S. supply glut.


This week, oil prices were buoyed by optimism over a rebound in Chinese demand. However, the negative supply and monetary policy cues essentially negated this optimism, resulting in a decline in crude prices. In recent sessions, oil prices fluctuated wildly as markets evaluated a more optimistic demand forecast against hints of impending conflict.


The Organization of Petroleum Exporting Countries and the International Energy Agency both increased their demand predictions for the year, with a rebound in China expected to account for over fifty percent of oil demand this year.


China proposed fresh spending measures this week as part of its efforts to bolster economic development following three years of COVID restrictions.


Although China's relaxation of the majority of anti-COVID policies this year, China's economic figures have been fairly mediocre. Oil bulls are now waiting for more consistent evidence of economic improvement in the top oil importer in the world.

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