Oil prices began to rise moderately during trading on Thursday, recovering from the decline over the previous three sessions.
December futures for Brent on London’s ICE Futures exchange increased by $0.38 (0.41%) to $92.83 per barrel by 15:06 CST.
Quotes of futures for WTI for November in electronic trading on the New York Mercantile Exchange (NYMEX) by the specified time increased by $0.28 (0.32%) – up to $87.55 per barrel.
On Wednesday, Brent shed 2%, WTI – 2.3%, both brands finished in the red for the third session in a row.
Traders’ attention on Thursday is focused on the US Department of Energy’s report on energy stocks in the country over the past week, which will be published at 18:00 Moscow time on Thursday.
Experts polled by S&P Global Commodity Insights predict a weekly increase in US oil inventories by 2.2 million barrels, as well as a decrease in gasoline and distillate reserves by 2.1 million and 2.3 million barrels, respectively.
Data from the American Petroleum Institute (API), released yesterday, showed an increase in US oil inventories for the week ended October 7 by 7.1 million barrels after a decrease of 1.77 million barrels a week earlier.
Meanwhile, the International Energy Agency (IEA) on Wednesday lowered its 2022 oil demand growth forecast by 100,000 b/d to 99.6 million b/d. Thus, in 2022, the IEA expects global oil demand to grow by 1.9 million b/d against 2 million b/d a month earlier. The estimate of global oil demand in 2023 has been reduced from 101.8 million b/d to 101.3 million b/d.
The agency notes that the estimate of global demand has been adjusted due to the deterioration of the global economy, as well as rising fuel prices due to the adopted OPEC + plan to reduce production.
“Sustainable growth prospects are rapidly fading away amid persistent inflationary pressures, quantitative tightening, regular increases in borrowing costs, a strong dollar and coronavirus-related restrictions in China, the world’s second-largest economy,” said PVM analyst Tamas Varga.
Oil prices changed little on Friday morning after rising for four sessions in a row on the decision of OPEC+ to cut production by 2 million b/d.
The cost of December futures for Brent crude on the London ICE Futures exchange by 8:10 am CST on Friday is $94.22 per barrel, which is $0.2 (0.21%) lower than the closing price of the previous session. As a result of trading on Thursday, these contracts rose by $1.05 (1.1%) to $94.42 per barrel.
The price of futures for WTI oil for November in electronic trading on the New York Mercantile Exchange (NYMEX) fell by this time by $0.19 (0.21%), to $88.24 per barrel. By the close of the market on Thursday, the value of these contracts increased by $0.69 (0.8%) to $88.45 per barrel.
Brent recently updated a maximum for a month, WTI – has grown to a maximum since September 14, according to Dow Jones Market Data. Both varieties could end the week up 11%.
Oil quotes have been rising since Monday, first on expectations of the OPEC + decision, and then on the decision itself.
Ministers of the OPEC+ countries on Wednesday approved a reduction in the quota for oil production in November by 2 million b/d compared to September. This is the largest decline since the start of the coronavirus pandemic.
However, the real reduction in production will be less than the declared one – by 1-1.1 million barrels per day, the Minister of Oil of Saudi Arabia said, explaining that in some countries of the alliance, real production is in fact below the quota.
At the same time, further production cuts could accelerate the acceptance of a price cap for Russian oil by Western countries, analysts said.
Oil prices continue to rise on Tuesday, the market is waiting for the meeting of the OPEC + states, during which a decision may be made to reduce the quota for oil production.
Bloomberg reports, citing sources in OPEC+, that the alliance will discuss the possibility of cutting production by more than 1 million barrels per day (b / d).
The meeting of the OPEC+ Ministerial Monitoring Committee (JMMC), as well as the OPEC+ Ministerial Meeting, will be held in person at the OPEC Secretariat in Vienna on October 5. Since March 2020, meetings have been held via videoconferencing.
The cost of December futures for Brent oil on the London ICE Futures exchange by 8:10 am UTC on Tuesday is $89.27 per barrel, which is $0.41 (0.46%) higher than the closing price of the previous session. As a result of trading on Monday, these contracts rose by $3.72 (4.4%) to $88.86 per barrel.
The price of futures for WTI oil for November in electronic trading on the New York Mercantile Exchange (NYMEX) rose by this time by $0.24 (0.29%), to $83.87 per barrel. By the close of the market on Monday, the value of these contracts increased by $4.14 (5.2%) to $83.63 per barrel.
“We expect a significant reduction in the OPEC+ quota on paper, but in reality it will be much less,” said Warren Patterson, who is in charge of commodity markets strategy at ING Groep NV in Singapore.
“A decrease of 1 million b/d would mean a real decrease in production by less than 400,000 b/d,” Bloomberg quoted the expert as saying.
Since September last year, a number of OPEC+ countries have lagged behind their planned production levels due to lack of investment, due to military clashes and sanctions. At the same time, the overall OPEC + quota increased, which allowed countries that can increase production to do so. In September of this year, OPEC+ ministers decided to reduce the quota for October by 100,000 bpd.
Oil prices fell 25% in the past quarter amid signals of a weakening global economy as a result of the rapid tightening of monetary policy by global central banks, including the Federal Reserve System (Fed). Experts fear a global recession and, consequently, a decline in demand for oil.
Oil prices will stabilize during trading on Wednesday afternoon after falling in the morning.
The cost of November futures for Brent crude on the London ICE Futures exchange by 14:50 UTC on Wednesday is $86.37 per barrel, which is $0.1 (0.12%) higher than the closing price of the previous session.
The price of futures for WTI oil for November in electronic trading on the New York Mercantile Exchange (NYMEX) rose by this time by $0.23 (0.29%), to $78.73 per barrel.
The rise of the US dollar, which resumed on Wednesday, has a negative impact on the market. The appreciation of the dollar against the backdrop of prospects for tightening US monetary policy leads to the fact that the purchase of commodities becomes less attractive for holders of other currencies.
Investors are also concerned about a potential decline in oil demand due to the risks of a global economic recession amid rising interest rates by the world’s central banks. Analysts at Goldman Sachs downgraded their forecast for oil prices for next year to $108 per barrel from $125 per barrel earlier.
Meanwhile, traders remain concerned about the prospects for supply, which is associated with the suspension of production in the Gulf of Mexico due to the approaching Hurricane Ian. The US National Hurricane Center expects Ian to reach Florida as early as Wednesday.
Due to the approach of the hurricane, Chevron and BP announced the suspension of four production platforms in the Gulf of Mexico.
Market attention is gradually shifting to the upcoming meeting of the OPEC + alliance, which will be held on October 5. Analysts believe that the alliance may decide to actively cut oil production due to falling prices.
Oil prices picked up a steady pace of growth on Tuesday afternoon on concern due to reduced supply on the market.
The price of November futures for Brent crude on the London ICE Futures exchange by 14:35 Moscow time on Tuesday is $85.11 per barrel, which is $1.05 (1.25%) higher than the price at the close of the previous session.
The price of futures for WTI oil for November in electronic trading on the New York Mercantile Exchange (NYMEX) rose by this time by $0.91 (1.19%), to $77.62 per barrel.
Traders are monitoring the situation in the Gulf of Mexico in connection with the growing strength of Hurricane Yan. The US National Hurricane Center expects Yan to reach Florida by the middle of this week.
Chevron Corp. announced the suspension of two production platforms in the Gulf of Mexico due to the hurricane. The total volume of oil production from these two platforms is about 120,000 barrels per day.
British BP also intends to close two platforms in the region, each of which produces more than 100 thousand barrels per day.
In addition, the market takes into account that the OPEC + countries may cut oil production levels in order to spur price increases. Representatives of the association have repeatedly stated this before.
“I think OPEC will have to do this at some point in order to cut supply and push prices up,” said Gary Ross, head of Black Gold Investors.
In order to keep prices at $90 per barrel, OPEC will need to cut production by 1 million b/d, according to Ross’s calculations. In the meantime, OPEC + can cut production by at least 500 thousand b / d, according to UBS.
Meanwhile, the supply of petroleum products may be limited in France. The TotalEnergies refinery in Feisen will remain closed until at least mid-October, French trade union CGT said. The plant, which produces up to 40% of oil products in France, has been closed since September 16 due to technical problems.
In addition, two other TotalEnergies refineries in Fos-sur-Mer and Port-Jerome-Gravenchon have been closed since last week due to a workers’ strike.
Oil prices fall on Friday, once again ending the week in the red.
The pressure on the market is exerted by fears of a recession in the global economy as a result of raising interest rates by central banks around the world. At the same time, the decline in prices is constrained by expectations of a reduction in supply on the market, including supplies from Russia.
The cost of November futures for Brent crude on the London ICE Futures exchange by 8:15 am CST on Friday is $90.17 per barrel, which is $0.29 (0.32%) lower than the closing price of the previous session. As a result of trading on Thursday, these contracts rose by $0.63 (0.7%) to $90.46 per barrel.
The price of futures for WTI oil for November in electronic trading on the New York Mercantile Exchange (NYMEX) fell by this time by $0.25 (0.3%), to $83.24 per barrel. By the close of the market on Thursday, the value of these contracts rose by $0.55 (0.7%) to $83.49 per barrel.
OPEC countries may resort to further cuts in oil production if the market continues to decline as the current level of prices affects the budgets of members of the cartel, Nigerian Oil Minister Timipre Silva said in an interview with Bloomberg on Thursday.
Fitch Solutions experts note the presence of signals of weakening demand for oil in the physical market. “The near-term outlook remains highly uncertain,” Fitch said in a review.
