Increased concerns about economic recession causing oil prices to plummet

Brent oil prices fell by 4.26 USD, equivalent to 5.2%, to 78.03 USD/barrel; US WTI crude oil fell by 4.09 USD, equivalent to 5.3%, to 72.84 USD/barrel.

According to Refinitiv Eikon data, Brent oil prices have fallen by about 9.4% this week, the sharpest drop in the first two days of the year since January 1991.

On Reuters, Mizuho analyst Robert Yawger said there are many reasons for investors to be concerned about fuel. Specifically, the COVID-19 epidemic situation in China has not yet decreased and concerns about a near future economic downturn are putting pressure on the market.

According to experts, in 2023, most of the global economy will face difficulties as the major economies contributing to global growth, the United States, Europe and China, are all experiencing weakness.

A survey from the US Department of Labor shows that job opportunities have decreased less than expected. This raises concerns that the US Federal Reserve (Fed) will use the tightening labor market as a reason to keep interest rates higher for longer than expected.

Meanwhile, the Chinese government has increased export quotas for refined oil products in the first phase for 2023, signaling expectations of weak domestic demand.

Saudi Arabia's top oil exporter Xeut may reduce the price of its top Arab Light crude oil exported to Asia in February. Currently, the price of this crude oil product is at its lowest level in 10 months due to concerns about the continued supply in the market.

According to the American Petroleum Institute (API), US crude oil reserves increased by 3.298 million barrels in the week ended December 30, 2022.

US crude oil reserves will increase by only 13 million barrels in 2022, while crude oil stored in strategic oil reserves will decrease nearly 17 times compared to that figure - 221 million barrels.