Since the beginning of this month, market concerns about weak demand have intensified, and a series of warning lights of crude oil-related indicators have flashed, dragging crude oil futures prices to continue to fall.
On Friday, according to media reports, as of Thursday, the premium of Dubai Commodity Exchange Oman futures compared with Dubai crude oil swap plummeted by about 80% this month, falling below 1 USD/barrel, falling to a low of nearly seven months. This premium indicator is a key indicator to measure the strength of spot oil spot prices in Asia Middle East .
At the same time, the spot price spread between Brent crude oil and WTI crude oil has fallen to a premium, indicating that there is sufficient supply in the near future and the market is bearish on oil prices.
As red flags flashed, Brent crude oil futures fell to its lowest since January earlier this week, hitting $82.31; on Friday, oil prices were around $86.5 per barrel, the lowest intraday price since January.
As the global epidemic recurs, market expectations for a recovery in oil demand are weakening. Although in this challenging context, EU is considering limiting the price of Russian crude oil in the range of US$65 to US$70 per barrel, and is planned to be implemented from December 5, 2022. The EU is currently coordinating with G7 (G7) and more details are expected to be released.
But in response to this, Vandana Hari, founder of Singapore's energy consulting firm Vanda Insights, said that the price limit news did not increase the premium cost, and the market is relatively optimistic, and there will be no major supply interruption, at least it will not be continuous interruption.
Since the outbreak of the Russian-Ukrainian conflict, Oman futures swap premium against Dubai once fell below $1 in April. As many energy buyers began to seek oil supplies outside Russia, the increase in the attractiveness of the Middle East crude oil has pushed up the region's crude oil price premium, which soared to $15 per barrel in March.
As physical transactions this month are mainly aimed at loading goods in January, the spot premium of high-grade crude oil in Persian Gulf is declining significantly; at the same time, data from PVM Oil Associates shows that Dubai crude oil swaps have turned into a premium state this Friday, and shows that the market is bearish on the oil prices from December this year to April next year.
In addition, Morgan Stanley lowered oil price forecasts, and Morgan Stanley analysts Martijn Rats and Amy Serged in the latest report lowered the first quarter of 2023 Brent and WTI oil price forecasts for the first quarter of 2023 to $95 and $92.50 respectively.
Morgan Stanley said that by the end of the first quarter of next year, crude oil supply will be slightly oversupply, but the balance will resume in the second quarter, and a deficit may occur in the second half of the year.
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