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Oil Prices Drop 3 Percent on Tuesday After Moderna’s CEO Comment

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Oil prices tumbled more than 3% on Tuesday after Moderna’s CEO cast doubt on the efficacy of COVID-19 vaccines against the Omicron coronavirus variant, spooking financial markets and adding to worries about oil demand.

The head of drugmaker Moderna told the Financial Times that COVID-19 vaccines are unlikely to be as effective against the Omicron variant of the coronavirus as they have been against the Delta variant.

Brent crude futures fell $2.32, or 3.2%, to $71.12 a barrel at 0912 GMT after slipping to an intraday low of $70.52, the lowest since Sept. 1.

U.S. West Texas Intermediate (WTI) crude futures fell $2.15, or 3.1%, to $67.80 a barrel, off a session low of $67.06, the weakest since Aug. 26.

Fed Chairman Jerome Powell will also tell U.S. lawmakers later in the day the variant could imperil economic recovery, prepared remarks show.

“The economic impact is driven by fear, and by the policy response… Fear is impacting travel. There are outright bans. But also the fear of being stranded which causes travel plans to alter,” Paul Donovan from UBS said in a note.

Oil plunged around 12% on Friday along with other markets on fears the heavily mutated Omicron would spark fresh lockdowns and dent global oil demand. It is still unclear how severe the new variant is.

With a weakening demand outlook , expectations are growing that the Organization of the Petroleum Exporting countries, Russia and their allies, together called OPEC+, will put on hold plans to add 400,000 barrels per day (bpd) to supply in January.

“We think the group will lean towards pausing output hikes in light of the Omicron variant and the oil stockpile release by major oil consumers,” Commonwealth Bank commodities analyst Vivek Dhar said in a note.

Pressure was already growing within OPEC+, due to meet on Dec. 2, to reconsider its supply plan after last week’s release of emergency crude reserves by the United States and other major oil-consuming nations to address soaring prices.

“Following the global strategic reserve releases and the announcement of dozens of countries restricting travel… OPEC and its allies can easily justify an output halt or even a slight cut,” OANDA analyst Edward Moya said in a note.

Still, Citi analysts expect OPEC+ to continue to add more barrels in January.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Drops to $93.32 a Barrel on Monday

Oil prices declined on Monday amid concerns over the recession and the drop in crude oil imports in China, the world’s largest importer of the commodity.

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Oil prices declined on Monday amid concerns over the recession and the drop in crude oil imports in China, the world’s largest importer of the commodity.

Brent crude oil, the international benchmark for Nigerian oil, dropped to $93.32 per barrel at 12:47 pm Nigerian time, down from $96.06 a barrel it attained during the Asian trading session.

U.S. West Texas Intermediate oil also depreciated from $89.47 a barrel to $87.45.

China, the world’s top crude importer, imported 8.79 million barrels per day (bpd) of crude in July, up from a four-year low in June, but still 9.5% lower than a year ago, customs data showed.

Chinese refiners drew down stockpiles amid high crude prices and weak domestic margins even as the country’s overall exports gained momentum.

Reflecting lower U.S. gasoline demand, and as China’s zero-Covid strategy pushes recovery further out, ANZ revised down its oil demand forecasts for 2022 and 2023 by 300,000 bpd and 500,000 bpd, respectively.

Oil demand for 2022 is now estimated to rise by 1.8 million bpd year-on-year and settle at 99.7 million bpd, just short of pre-pandemic highs, the bank said.

Russian crude and oil products exports continued to flow despite an impending embargo from the European Union that will take effect on Dec. 5.

In the United States, energy firms cut the number of oil rigs by the most last week since September, the first drop in 10 weeks.

The U.S. clean energy sector received a boost after the Senate on Sunday passed a sweeping $430 billion bill intended to fight climate change, among other issues.

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Crude Oil

Weak Manufacturing Data from China, Japan Weigh on Oil

Oil prices dropped on Monday, as weak manufacturing data from China and Japan for July weighed on the outlook for demand, while investors braced for this week’s meeting of officials from OPEC and other top producers on supply adjustments.

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Oil prices dropped on Monday, as weak manufacturing data from China and Japan for July weighed on the outlook for demand, while investors braced for this week’s meeting of officials from OPEC and other top producers on supply adjustments.

Brent crude futures were down 82 cents, or 0.8%, at $103.15 a barrel at 0608 GMT. U.S. West Texas Intermediate crude was at $97.44 a barrel, down $1.18, or 1.2%.

Fresh COVID-19 lockdowns snuffed out a brief recovery seen in June for factory activity in China, the world’s largest crude oil importer. The Caixin/Markit manufacturing purchasing managers’ index (PMI) eased to 50.4 in July from 51.7 in the previous month, well below analysts’ expectations, data showed on Monday.

Japanese manufacturing activity expanded at its weakest rate in 10 months in July, data showed on Monday.

“China’s disappointing manufacturing PMI is the primary factor that pressed on oil prices today,” CMC Markets analyst Tina Teng said.

“The data shows a surprising contraction of economic activities, suggesting that the recovery of the world-second-largest economy from the covid lockdowns may not be as positive as previously expected, which darkened the demand outlook of the crude oil markets.”

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Crude Oil

Oil Dips Further on Concerns Over FOMC Interest Rate Increase

Crude oil declined on Monday, extending its bearish trend on concerns that the Federal Open Market Committee (FOMC) expected interest rates increase later this week could slow down growth and drag on demand.

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Crude Oil - Investors King

Crude oil declined on Monday, extending its bearish trend on concerns that the Federal Open Market Committee (FOMC) expected interest rates increase later this week could slow down growth and drag on demand.

Brent crude oil, the international benchmark for Nigerian oil, declined by $1.19 or 1.2% to $102.01 a barrel at 10:24 am Nigerian time on Monday. While the U.S. West Texas Intermediate (WTI) slid $1.33, or 1.4%, to $93.37 a barrel.

“Oil prices have been under pressure due to growing worries that aggressive rate rises by the U.S. Federal Reserve will slow the global economy and reduce fuel demand,” said Tetsu Emori, chief executive of Emori Fund Management Inc.

“Slack recovery in the Chinese economy is also weighing on market sentiment,” he said.

Oil futures have been volatile in recent weeks as traders have tried to reconcile the possibilities of further interest rate hikes, which could limit economic activity and thus cut fuel demand growth, against tight supply from disruptions in trading of Russian barrels because of Western sanctions amid the Ukraine conflict.

Officials at the Fed have indicated that the central bank would likely raise rates by 75 basis points at its July 26-27 meeting.

China, the world’s second-biggest economy, narrowly missed a contraction in the second quarter, growing just 0.4% year-on-year, weighed down by COVID-19 lockdowns, a weak property sector and cautious consumer sentiment.

“The market tone is likely to remain bearish also on worries that the resumption of some Libyan crude oil output would ease tightness in global supply,” said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.

On the supply side, Libya’s National Oil Corporation (NOC) aims to bring back production to 1.2 million barrels per day (bpd) in two weeks, NOC said in a statement early on Saturday.

The European Union said last week that it would allow Russian state-owned companies to ship oil to third countries under an adjustment of sanctions agreed by member states last week aimed at limiting the risks to global energy security.

However, Russian Central Bank Governor Elvira Nabiullina said on Friday that Russia would not supply oil to countries that decided to impose a price cap on its oil.

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