(New York) Oil prices, without a clear direction at the start of the session, finally ended lower, as fears over the consequences of a stronger than expected rise in US rates overshadowed the fall in crude inventories in the UNITED STATES.
A barrel of Brent North Sea oil for May delivery fell 63 cents, or 0.8%, to close at $82.66.
A barrel of US West Texas Intermediate (WTI), for April delivery, fell 92 cents, or 1.2%, to end at $76.66.
The head of the American central bank (Fed), Jerome Powell, more or less repeated on Wednesday before the House of Representatives what he had said the day before in the Senate: to fight against persistent inflation, rates may go increase more, and for longer, than expected so far.
He just qualified his message on Wednesday a little, stating that “no decision (had) been taken”.
The prospect of higher-than-expected rates weighs in any case on oil prices because “it pushes up the dollar”, and therefore makes barrels denominated in the American currency less attractive, and “it revives fears of a recession and, in turn, lower energy demand,” notes Andy Lipow of Lipow Oil Associates.
Raising interest rates tends to increase the cost of credit for households and businesses, and thus weigh on economic activity.
The employment figures published on Wednesday have fueled the hypothesis that the Fed will tighten its monetary policy further in an attempt to slow down economic activity, and therefore inflation: according to a monthly ADP/Stanford Lab survey, companies in the sector private sector in the United States created 242,000 jobs in February, more than in January and more than expected, a sign that the American labor market remains in excellent health.
The announcement by the US Energy Information Agency (EIA) of a decline in commercial crude oil reserves in the United States in the week ending March 3, after ten consecutive weeks of increases, does not did not make prices rebound.
Gasoline inventories also fell, but less than expected, while those of distilled products, such as heating oil, rose slightly.
On the natural gas side, the Dutch TTF futures contract, considered the European benchmark, remained under pressure after falling on Monday to a new low for almost 18 months at 41.39 euros, evolving Wednesday at the end of the day at 41, 90 euros.
Investors are watching the stir around the sabotage of the two Nord Stream gas pipelines in the Baltic Sea last September.
An attack was quickly suspected, giving rise to all-out speculation about the perpetrators of this logistically complex and diplomatically ultra-sensitive operation.
A Tuesday article from New York Times blamed the sabotage on a “pro-Ukrainian group”, based on information obtained by US intelligence, but without the involvement of Ukrainian President Volodymyr Zelensky. Kyiv on Wednesday denied any involvement while German authorities said they were investigating a boat suspected of having brought the explosives to the site.
Nord Stream gas pipelines were at the heart of geopolitical tensions in 2022. In late August, the price of European natural gas was pushed to extreme levels by the prospect of a disruption in deliveries from Russia in alleged retaliation against Western sanctions. . He had then come close to his historic record.
Since that peak, the TTF has tumbled more than 86%, with the Old Continent benefiting from an overall warmer than normal winter and higher inventory levels.