NRGU - Oil prices slump to April lows as demand worries erase gains from OPEC cut

2023-04-26 18:30:40 ET

Shares of energy companies fell sharply Wednesday as crude oil futures sunk to their lowest levels this month, weighed by worries of a potential recession that likely would hurt energy demand.

The latest U.S. supply data from the Energy Information Administration " normally would be extremely bullish if it were not for banking concerns," CMC Markets UK chief analyst Michael Hewson said, referring to mounting questions around the survival of First Republic.

The EIA reported Wednesday that U.S. commercial crude inventories fell by a greater than expected 5.1M barrels for the week ended April 21.

OPEC+ could soon raise the "prospect of fresh reductions in output if demand continues to look weak," Hewson said.

Front-month Nymex crude ( CL1:COM ) for June delivery settled -3.6% to $74.30/bbl, its lowest since March 29, June Brent crude ( CO1:COM ) closed -3.8% to $77.69/bbl, the weakest since March 24, and front-month U.S. natural gas ( NG1:COM ) for May delivery finished -8.2% at $2.117/MMBtu, its largest one-day dollar and percentage decline since March 6.

ETFs: ( NYSEARCA: XLE ), ( XOP ), ( VDE ), ( OIH ), ( XES ), ( IEZ ), ( NYSEARCA: USO ), ( BNO ), ( UCO ), ( DBO ), ( SCO ), ( USL ), ( DRIP ), ( GUSH ), ( USOI ), ( NRGU ), ( UNG ), ( UGAZF ), ( BOIL ), ( KOLD ), ( UNL ), ( FCG )

Contrasting with the retreat in broader oil markets, the price of Urals crude - Russia's main grade of oil - has climbed this year to $55/bbl , driven by demand from China and India, according to Argus Media.

Russian crude still trades at a substantial discount to benchmark oil prices, as it has since the invasion of Ukraine, but the gap has narrowed significantly.

Reports last week indicated April oil loadings from Russia's western ports were on track to reach their highest since 2019 at more than 2.4M bbl/day, despite promising to cut output.

More Seeking Alpha analysis:

• Be Protected, The Next Oil Bull Market Will Be Wild!
• Why Did OPEC Cut Oil Production, and How Does This Impact Energy Stocks?
• OPEC Cuts Nearly 1.2 Million Barrels Pay Day, WTI Surges Higher: Winners and Losers

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