ENERGY MARKET ANALYSIS: Global oil prices stumble into 2023, holding promise of easing inflation

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A bearish mood has gripped the desks of global oil traders as the price of the fossil fuel took a dive in the first trading days of 2023. For the South African economy, this is a double-edged sword. It heralds the promise of slowing inflation and an ...

Brent Crude futures, the global benchmark for the oil price, fell more than 10% in the first two days of trade in 2023 to below $80 a barrel. Late on Thursday, they were fetching around $78 a barrel.

A souring outlook for the global economy has also unleashed the oil market’s inner bear. Moody’s recently forecast a “slowcession” for the US for 2023, which sees the world’s largest economy avoiding a recession, but growing at a snail’s pace, as a brutal interest rate hiking cycle bites. It has since emerged that Opec lifted production in December, led by Nigeria and in defiance of the cartel’s commitment to cut output, so forecasts can be expected to be revised lower again.It’s early days yet, and if you can accurately predict oil’s performance in 2023, you stand to make a lot of money. But the bottom line is that, at the moment, the oil price does not have a lot going for it despite the ongoing conflict in Ukraine.

Domestic price pressures have already started 2023 in retreat. South Africa’s petrol price at the pump fell on Wednesday by more than R2 a litre and almost R2.70 for diesel, a reflection of faltering global prices and mild rand gains in December. This should filter into the price pipeline and ease inflationary pressures.

 

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France Dernières Nouvelles, France Actualités

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