Crude oil has lost 4.2% since reaching an all-time high at 101.32 USD on Tuesday. Prices of Brent oil also tumbled from 99 USD to 95 USD. The impulse came after the Philadelphia Fed Index was published. The index that tracks the Philadelphia manufacturing sector dropped to -24, the lowest in 7 years. The concern is, that the previous such a low reading was published in February of 2001, a couple of weeks before the last slowdown in the U.S began. That of course, brings back the discussion about a possible recession in the United States and a possible drop in demand for “black gold”.

The reason that is also slowing the oil growth rate are increasing crude oil supplies. Yesterday, the U.S Energy Department informed that crude supplies increased by 4.2 million barrels, twice the forecast, and currently stand at 305.3 million. That is the highest level since November and the demand side is the concern. Supplies of crude oil have risen almost 8% during the last six weeks.

But there is the other side of the coin. The Organization of Petroleum Exporting Countries (OPEC) may cut output on their March 5^th meeting. OPEC is concerned that prices and demand for oil will fall in the second quarter.

Today in the morning the oil market started to rebound, mainly due to the weakening American dollar. Currently at 12:10 CET, Brent oil stands at 97 USD per barrel.  

Adam Narczewski