©Reuters. Oil prices are falling for the second day in a row, what is the reason?
Arabictrader.com – Crude oil prices fell sharply during trading on Wednesday for the second straight day amid growing concerns among investors over weak global demand due to a possible economic downturn, particularly in the US, which is one of the largest consumers of crude oil in the world.
In terms of transactions, spot contracts were down 0.47% to trade around $79.83 a barrel, while spot contracts for U.S. crude fell 0.20% to $74.64 a barrel.
Following are the main reasons that have led to the decline in crude oil prices:
Uncertainty about global growth has triggered investor panic over a slowdown in the global economy in the coming period, which in turn will weaken demand for oil. According to forecasts released by the Bloomberg agency, the global economy is expected to face a state of economic slowdown in the coming period. Against this background, the agency has forecast the global economy to grow by just 2.4% for the year 2023, compared with its expectations of the global economy growing by around 3.2% this year, due to of the continuing repercussions of the crisis of high energy prices due to the Russo-Ukrainian war.
Furthermore, the Goldman Sachs chief executive predicted that the US will face a recession within the next year to a large extent, adding that it will be able to reduce inflation to approach the 4% level and that the final interest rate will reach 5% and this is accompanied by limited economic growth. Just 1% and this slowdown in the US economy could lead to a decline in US demand for crude oil, and this has reinforced the decline in oil prices.
Again, investors have turned away from crude oil amid growing expectations of further steep US interest rate hikes given positive US economic data released earlier this month, supporting the US Federal Reserve to continue to tighten US monetary policy at a rapid pace.
At the same time, the US Energy Information Administration on Tuesday cut its forecast for 2023 global oil demand growth by 160,000 barrels per day, to just about one million barrels per day, and these new expectations raised market concerns about weak global demand for oil next year, including the negative impact on crude oil prices.
