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Crude Oil

Tight Supply Bolsters Oil Price Above $78 a Barrel

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Crude Oil - Investors King

Tight global crude oil supply and hopes of a further demand recovery in the new year bolstered global oil price above $78 a barrel on Monday even with OPEC+ planning to increase supply on Tuesday.

Brent crude oil, against which Nigerian oil is priced, appreciated by 39 cents or 0.5 percent to $78.17 a barrel at 5:03 pm Nigerian time, while the U.S West Texas Intermediate (WTI) crude slipped by 25 cents or 0.3 percent to $74.96 per barrel.

OPEC+ will meet on Tuesday to agree to increase crude oil production despite the rising Omicron cases and over 4,000 cancelled flights as at Sunday.

“Infection rates are on the rise globally, restrictions are being introduced in several countries, the air travel sector, amongst others, is suffering, yet investors’ optimism is tangible,” said Tamas Varga of oil broker PVM.

“In a nutshell, 2021 demonstrated that the war against the coronavirus is a winnable one although the path to victory is paved with unexpected twists and turns.”

Some experts partially attributed the increase in global oil prices to Libya’s outage. An estimated 200,000 barrels per day will be cut off the global market for a week due to pipeline maintenance.

In 2021, Brent crude oil rose by 50 percent, spurred by the global recovery from the COVID-19 pandemic and OPEC+ supply cuts, even as infections reached record highs worldwide.

“Crude and oil product prices should benefit from oil demand moving above 2019 levels,” said a report from UBS analysts including Giovanni Staunovo. “We expect Brent to rise into a $80–90 range in 2022.”

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 - Investors King

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

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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