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Unrest in Kazakhstan and Libya Shoots up Oil Prices

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The ongoing unrest in Kazakhstan and the supply outage in Libya have bolstered global oil prices on Thursday.

The deadly violence, across the tightly controlled former Soviet state, has been condemned by Russia, which sent paratroopers on Thursday into Kazakhstan to quell the unrest.

However, there were no indications that oil production in the country has been affected so far.

“The political situation in Kazakhstan is becoming increasingly tense.” German financial institution, Commerzbank said, “And this is a country that is currently producing 1.6 million barrels of oil per day.”

The Global benchmark Brent crude futures rose $1.78, or 2.2%, to $82.58 a barrel by 1445 GMT, the highest since late November. U.S. West Texas Intermediate (WTI) crude futures also gained $2.18, or 2.8%, to $80.03, the highest since mid-November.

However, Brent’s six-month backwardation stood at about $4 a barrel, its widest since late November.

Backwardation is a market structure where current prices trade at a premium to future prices. It is usually a sign of a bullish market.

In Libya, lack of maintenance and oilfields shutdowns has plunged the leading African oil producer’s output to 729,000 bpd.

According to Libya’s National Oil Corp on Thursday, production slumped from a high of more than 1.3 million bpd recorded in 2021.

The oil prices rallied despite a surge in United States fuel stocks last week.

The North American country’s crude oil stockpiles fell last week while gasoline inventories surged by more than 10 million barrels, the biggest weekly build since April 2020, as supplies backed up at refineries because of reduced fuel demand, Reuters noted.

OPEC+ on Tuesday agreed to further increase oil production by 400,000 bpd in February, as it has done each month since August.

Top oil exporter, Saudi Arabia however cut the official selling price for all grades of crude it sells to Asia in February by at least $1 a barrel.

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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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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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