(New York) Oil prices stabilized Thursday after their sharp fall the day before, with the market expecting these lower price levels to encourage the United States to fill its strategic crude reserves.
The price of a barrel of Brent from the North Sea for delivery in July increased 0.27% to $83.67.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in June, closed almost stable (-0.06%) at $78.95.
“The hope that the United States fills its strategic reserves (of crude) provides a little support” to the two global oil benchmarks, commented Neil Wilson, analyst at Finalto.
The sharp drop in prices the day before caused WTI to slide below $80 per barrel, a price level fueling speculation that the United States would try to take advantage of it to build up its strategic reserves (SPR ) of oil.
Between September 2021 and July 2023, the United States drained some 274 million barrels from its strategic reserves, or around 44% of the total. At the end of this phase, SPRs fell to their lowest level in 40 years.
This fragile recovery in prices does not, however, hide “a broader downward trend”, estimated John Kilduff of Again Capital.
“The state of demand is not very good, particularly in terms of gasoline. Demand for gasoline has been weak four weeks in a row” as evidenced by the weekly report from the US Energy Information Agency (EIA) on stocks and production, John Kilduff further underlined.
The market also keeps an eye, according to him, on the evolution of the Japanese currency. On Thursday the yen recovered after a potential intervention by the Bank of Japan, but this rise is uncertain for the Japanese currency.
“If the yen were to weaken further” while the interest rate differential between Japan and the United States strongly favors the dollar, “this would be a cause for concern for the Japanese economy,” indicated the Again capital analyst.
An even weaker yen could significantly increase Japan’s oil import bill, denominated in dollars.
At the same time, the geopolitical risk premium on the price of the barrel continues to fade, the war between Israel and Hamas having had no consequences on “the region’s oil sector, despite the now direct involvement of the “Iran in crisis,” commented Tamas Varga of PVM Energy.