Oil Ends Mixed, But Analysts Worried By Huge Early WTI Trading Drop

Still, mild bank interest rate hikes were enough to stop a price loss bloodbath: File Image/Pixabay

After three straight sessions of steep losses, oil prices on Thursday were mixed upon news that the European Central Bank eased the pace of its interest rate hikes to 25 basis points, the smallest since they were first increased last summer.

With traders convinced that relentless hikes will ultimately ruin demand for oil, the ECB's delicate approach was more than welcome, as was its comment that "The Governing Council's future decisions will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to the 2 percent medium-term target."

Still, oil prices on Thursday reflected ongoing concerns over a variety of factors perceived as negative to the energy market: while Brent was up 9 cents to $72.42 per barrel at 1338 GMT, West Texas Intermediate fell 13 cents to $68.47.

So far this week, the commodity has fallen over 9 percent.

Many observers were disturbed by what they regarded as early "panic trading" on Thursday, noting that WTI plummeted by almost $5 per barrel shortly after the open at 6 a.m. in Singapore.

Warren Patterson, head of commodities strategy at ING, said, "My first thought was that it must have been a fat finger, but it could just have been someone closing out, and that kind of volume is going to be felt at that time."

Bloomberg noted that "The scale of the move will raise fresh questions about the health of liquidity in the market, particularly given the move was concentrated in WTI, while Brent remained insulated."

As for trading influencers overall, Tamas Varga, analyst at PVM, said,  "With the Fed possibly pausing, the debt ceiling hopefully resolved this month, the OPEC+ cut felt in a few weeks' time and global demand picking up in the second half of the year, we are growing in conviction that the question is not how low oil prices will fall, but how long."

As for how the week might close, Richard Snow, analyst at DailyFX, wrote, "The week of volatility is not done yet, tomorrow is NFP where more jobs are expected to have been added even if it's the lowest addition since early 2021."