Oil Prices Fell Last Week After Three Weeks of Growth

Global oil prices fell last week after three consecutive weeks of growth, as the slowdown in economic growth leads to weakened demand for energy resources.

The price of a barrel on the London market fell by 2.6 percent last week, to $95.99, while on the American market, the barrel decreased by 3.9 percent, to $88.96.

The price drop is a result of the slowdown in economic growth, which in turn weakens the demand for oil.

Last week, it was reported that oil inventories in the U.S. rose by 3.9 million barrels in the previous week, reaching the highest level since July 2021, indicating a decline in American fuel consumption.

On the other hand, prices are supported by traders’ hopes that demand could strengthen somewhat following the Chinese authorities’ decision to ease measures aimed at curbing COVID-19.

The easing of restrictions includes shortening quarantine for close contacts of infected individuals and foreign visitors to two days and lifting penalties on airlines that transport infected passengers.

– “The first small steps towards easing regulations announced by the Chinese government have allowed prices to rise, although this certainly does not represent a deviation from the strict zero-tolerance policy towards COVID, in our opinion,” wrote analysts from Commerzbank in a market review.

In addition to work-from-home provisions limiting mobility and reducing fuel demand, travel across China is still subdued as Chinese citizens want to avoid the risk of ending up in quarantine, analysts from ANZ Research noted in a memo.

The market was also boosted by a weaker dollar, as this leads to cheaper oil for buyers using other currencies, which stimulates demand.

The dollar index, which shows the movement of the U.S. dollar against the other six major world currencies, fell by almost 4 percent last week.

Support for prices is also provided by the imminent implementation of the EU embargo on Russian oil, as well as the recent decision by the Organization of the Petroleum Exporting Countries (OPEC) and its partners to reduce production.

After oil prices surged more than 50 percent last year, thanks to the recovery of economies from the COVID crisis, they have risen about 20 percent since the beginning of this year, primarily due to the war in Ukraine.