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Concerns about economic growth persist as crude oil prices decline
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Concerns about economic growth persist as crude oil prices decline

Concerns over a global economic slowdown persistently weighed on oil prices, causing a decline. U.S. crude futures were down 0.9% at $78.04 per barrel, while the Brent contract also fell 0.9% to $81.83 per barrel. Despite a modest 1% increase these gains were not enough to offset the significant losses of over 5% from the previous week. In the upcoming weeks, the Bank of England, the European Central Bank, and the U.S. Federal Reserve are expected to raise interest rates to combat elevated levels of inflation. However, there are growing fears that such aggressive tightening of monetary policy could dampen economic growth, potentially leading to a global recession later in the year and consequently reducing demand for crude oil. 

Adding to the concerns, the First Republic, a regional lender in the U.S., experienced $100 billion in customer withdrawals last month, heightening worries that smaller banks may limit lending to preserve cash, further hindering economic activity. Analysts at Morgan Stanley commented that the data indicates a continuing slowdown in the business cycle and that consensus earnings per share (EPS) expectations for 2023 are likely too high. In addition to the economic concerns, there are uncertainties surrounding Iraq's northern oil exports, which have shown limited signs of an imminent restart after a month-long standstill. Furthermore, members of the OPEC+ producer group are set to implement voluntary cuts in May. Traders are now closely monitoring the size of U.S. crude stocks, as the American Petroleum Institute is expected to release data on last week's inventories later in the session, with an anticipated draw of approximately 1.7 million barrels. The U.S. government's inventory report from the Energy Information Administration is scheduled for release on Wednesday.

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