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Crude Oil

Oil Drops Below $100 a Barrel Amid Recession Concerns

Global oil prices plunged on Wednesday as concerns over demand outweighed supply concerns. Energy investors fear recession would hurt demand regardless of current supply challenges being faced by the OPEC and allies due to Russian sanctions.

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Global oil prices plunged on Wednesday as concerns over demand outweighed supply concerns. Energy investors fear recession would hurt demand regardless of current supply challenges being faced by the OPEC and allies due to Russian sanctions.

Brent crude oil, the international benchmark for Nigerian crude, plunged from $114.70 a barrel on Monday to $98.49 a barrel on Wednesday before pulling back to $100.21 a barrel on Thursday at 1:57 am Nigerian time.

The U.S. West Intermediate Oil fell to $93.15 a barrel on Wednesday before paring losses to $95.13 per barrel on Thursday.

Both contracts recorded their largest daily drop since March on Tuesday on recession fears and other bearish pressures, which also kept a lid on Wednesday’s price rise.

Oil prices have seen a knock from a resurgent dollar, which is holding at a 20-year high against the euro and multi-month peaks against other major currencies.

A stronger U.S. dollar usually makes oil more expensive in other currencies, which could curb demand.

Renewed concerns of COVID-19 lockdowns across China could also cap oil price gains.

Adding to the downward pressure on prices, all oil and gas fields that were affected by a strike in Norway’s petroleum sector are expected to be back in full operation within a couple of days, Equinor said on Wednesday.

Norway’s government intervened to end the strike on Tuesday.

But analysts expect a quick resurgence in oil prices as supply tightness persists, pointing to front-month spreads which have held up despite Tuesday’s price fall.

Brent’s six-month market structure was in steep backwardation of $14.82 a barrel, little changed from the previous day. Backwardation exists when contracts for near-term delivery of oil are priced higher than those for later months.

“The price action overnight, with both contracts trading in near 15 dollar ranges, hints more at panic and forced liquidation, than a structural change in the tight supply-demand situation globally,” said Jeffrey Halley, a senior market analyst at OANDA, adding that oil prices may be in danger of overshooting to the downside.

Meanwhile, Caspian Pipeline Consortium (CPC), which takes oil from Kazakhstan to the Black Sea via one of the world’s largest pipelines, has been told by a Russian court to suspend activity for 30 days, although sources said exports were still flowing.

Operations at Kazakhstan’s giant Tengiz oilfield were not disrupted by an explosion on Wednesday and were continuing, the operator said, after the blast killed two workers and injured three.

 

 

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

Weak Chinese Data Drags on Crude Oil Prices

Oil prices extended their declines on Monday as weak Chinese data suggested possible slow demand

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Oil prices extended their declines on Monday as weak Chinese data suggested possible slow demand for the commodity in the world’s largest importer of crude oil.

Brent crude, against which Nigerian oil is priced, declined by $1.14, or 1.2%, to $97.01 a barrel after shedding 1.5% on Friday. The U.S. West Texas Intermediate crude oil depreciated by $1.06, or 1.2% to $91.03 a barrel, after a 2.4% decline in the previous session.

The unexpected slowdown in the Chinese economy in the month of July weighed on refinery output. Refinery output slipped to 12.53 million barrels per day, the lowest since March 2020.

“The official data suggests that oil demand is weakening as domestic logistics and consumer demand are deterred by the record high oil pump prices,” said Heron Lin, an economist at Moody’s Analytics.

Oil demand could stay on the downtrend for the rest of the year as the threat of COVID-19 restrictions encourages precautionary savings and reduces oil consumption, he added.

Saudi Aramco stands ready to raise crude oil output to its maximum capacity of 12 million bpd if requested to do so by the Saudi Arabian government, Chief Executive Amin Nasser told reporters on Sunday.

“We are confident of our ability to ramp up to 12 million bpd any time there is a need or a call from the government or from the ministry of energy to increase our production,” Nasser said. He added that China’s easing of COVID-19 restrictions and a pickup in the aviation industry could add to demand.

Oil prices rebounded more than 3% last week after a damaged oil pipeline component disrupted output at several offshore Gulf of Mexico platforms and as investors pared back expectations for interest rate increases in the United States.

Producers had moved to reactivate some of the halted production after repairs were completed late Friday, a Louisiana official said.

Energy services firm Baker Hughes Co (BKR.O) reported on Friday that U.S. oil rig count rose by 3 to 601 last week. The rig count, an early indicator of future output, has been slow to grow with oil production only seen recovering from pandemic-related cuts next year.

Global oil markets remained supported by tight supplies in the run-up to EU sanctions on Russian crude oil and refined product supplies this winter. read more

More supplies could come if Iran and the United States accept an offer from the European Union to revive the 2015 nuclear deal, which would will lift sanctions on Iranian oil exports, analysts said.

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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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