Benchmark oil gains slightly on Wednesday morning after dropping to two-week lows the day before as the dollar strengthened ahead of a series of central bank meetings.
The cost of November futures for Brent crude on the London ICE Futures exchange by 8:13 CST on Wednesday is $90.84 per barrel, which is $0.22 (0.24%) higher than the closing price of the previous session. As a result of trading on Tuesday, these contracts fell by $1.38 (1.5%) to $90.62 per barrel.
The price of futures for WTI oil for November in electronic trading on the New York Mercantile Exchange (NYMEX) is $84.09 per barrel by this time, which is $0.15 (0.18%) higher than the final value of the previous session. By the close of the market the day before, the value of these contracts fell by $1.42 (1.7%) to $83.94 per barrel.
“A strong dollar, rising bond yields and concerns about demand amid a global economic slowdown are putting pressure on oil prices again,” said Michael Hewson, senior market analyst at CMC Markets UK. “The market is expecting rate hikes this week from the Fed, the Bank of England and Swiss National Bank”.
“Worry about the lack of supply does not provide the support for quotes, which could be expected, but it also means that we will not see a strong collapse either,” the expert added.
The Fed meeting will end on Wednesday evening, and analysts generally believe that as a result of it, the key interest rate in the United States will be increased by at least 75 basis points.
Meanwhile, data from the American Petroleum Institute (API) indicated that U.S. oil inventories rose 1 million barrels last week after rising 6 million barrels a week earlier. The official inventory report from the US Department of Energy will be released at 17:30 CST.
Oil prices almost do not change on Tuesday after the end of trading on the previous day with growth.
The cost of November futures for Brent crude on the London ICE Futures exchange by 8:30 am UTC is $92.08 per barrel, which is $0.08 (0.09%) higher than the closing price of the previous session. As a result of trading on Monday, these contracts rose by $0.65 (0.7%) to $92 per barrel.
The price of futures for WTI oil for October in the electronic trading of the New York Mercantile Exchange (NYMEX) fell by this time by $0.06 (0.07%), to $85.30 per barrel. By the close of the market on Monday, the value of these contracts increased by $0.6 to $85.36 per barrel.
The focus of traders this week is a number of meetings of the central banks in the world, including meetings of the Fed and the Bank of England. Fears related to the fact that the rapid tightening of monetary policy by the world’s central banks will lead to a recession in the global economy and a drop in oil demand are one of the key factors pushing down the oil market in recent months.
Meanwhile, a potential increase in supply in the market may also have a negative impact on oil prices. The administration of US President Joe Biden has announced that it will sell an additional 10 million barrels of oil from the strategic reserve, writes Bloomberg.
In addition, the UAE national oil company Adnoc announced measures to increase production to 5 million barrels of oil per day by 2025 from the current 3.4 million barrels per day.
Meanwhile, refineries in China have submitted bids to supply an additional 15 million tons of petroleum products as part of the export quota, which could increase the supply of fuel in the world.
Oil prices rose on Monday as traders became more optimistic about the demand outlook amid news of the lifting of quarantine restrictions in China’s Chengdu, the capital of Sichuan province.
Chengdu, home to 21 million people, has become the largest city in China after Shanghai, where a strict lockdown was introduced to curb the spread of COVID-19. From Monday, major quarantine restrictions are lifted in Chengdu.
“The main reason for the fluctuation in oil prices is the change in demand expectations,” said Vishnu Varatan, an analyst at Mizuho Bank Ltd. in Singapore, quoted by Bloomberg. “Easing quarantine restrictions in China is an important factor for the market. We are talking about pent-up demand here.” , and that explains the immediate market reaction.”
The price of November futures for Brent oil on the London ICE Futures exchange by 8:10 am CST on Monday is $91.9 per barrel, which is $0.55 (0.6%) higher than the closing price of the previous session. As a result of trading on Friday, these contracts rose by $0.51 (0.6%) to $91.35 per barrel.
The price of futures for WTI oil for October in electronic trading on the New York Mercantile Exchange (NYMEX) rose by this time by $0.37 (0.43%), to $85.48 per barrel. By the close of the market on Friday, the value of these contracts increased by $0.01 to $85.11 per barrel.
As a result of the past week, Brent fell by 1.6%, WTI – by 1.9%.
The focus of traders this week – the meeting of the Federal Reserve System (FRS) and the Bank of England. Fears related to the fact that the rapid tightening of monetary policy by the world’s central banks will lead to a recession in the global economy and a drop in oil demand are one of the key factors pushing down the oil market in recent months. Oil prices are likely to end the third quarter with a decline, which will be noted for the first time in two years, Bloomberg notes.
Benchmark oil prices rose weakly on Friday morning after a sharp decline the day before, driven by a stronger dollar and worries about global fuel demand.
The price of November futures for Brent oil on the London ICE Futures exchange by 8:08 am UTC on Friday is $91.19 per barrel, which is $0.35 (0.39%) higher than the closing price of the previous session. As a result of trading on Thursday, these contracts fell by $3.26 (3.5%) to $90.84 per barrel.
The price of futures for WTI oil for October in the electronic trading of the New York Mercantile Exchange (NYMEX) is $85.30 per barrel by this time, which is $0.20 (0.24%) higher than the final value of the previous session. By the close of the market the day before, the value of these contracts fell by $3.38 (3.8%) to $85.10 per barrel.
“The dollar has rebounded strongly and is holding near recent highs amid a hawkish Fed policy outlook for the coming months,” StoneX energy analysts wrote in a note.
The September Fed meeting will take place next week, and the market is confident that the central bank will again raise its key rate by 75 basis points to slow down the continued high inflation in the US.
“For the near term, we remain cautious on oil prices as the global economy is under pressure from rising rates, undermining fuel demand,” Peter Cardillo, senior market economist at Spartan Capital Securities, wrote in a note.
Oil prices are slightly reduced in trading on Thursday after a steady rise in the previous session.
Traders are keeping an eye on the situation in China, as well as evaluating the announcement of the US Department of Energy regarding plans to replenish the Strategic Petroleum Reserve (SPR).
The authorities of Chengdu, the capital of Sichuan province, are preparing to ease quarantine restrictions in certain areas of the city, which is home to 21 million people, Bloomberg reports.
On the eve of the International Energy Agency (IEA) said that the demand for oil in China in 2022 may decline for the first time since 1990 due to tough measures taken by the authorities to curb the spread of coronavirus. According to the IEA forecast, oil demand in China will decrease by 2.7% this year.
The price of November futures for Brent oil on the London ICE Futures exchange by 8:20 q.m. on Thursday is $93.9 per barrel, which is $0.2 (0.21%) lower than the closing price of the previous session. As a result of trading on Wednesday, these contracts rose by $0.93 (1%) to $94.1 per barrel.
The price of futures for WTI oil for October in the electronic trading of the New York Mercantile Exchange (NYMEX) is $88.41 per barrel by this time, which is $0.07 (0.08%) lower than the final value of the previous session. By the close of the market the day before, the value of these contracts increased by $1.17 (1.3%) to $88.48 per barrel.
The U.S. Department of Energy said on Wednesday that it could start replenishing the Strategic Petroleum Reserve (SPR) only after fiscal year 2023, which begins on October 1. Earlier, Bloomberg reported, citing sources, that the US intends to start replenishing the SPR when oil prices fall below $80 per barrel. The Ministry of Energy noted that its plan for SPR does not provide for a trigger price that should provoke oil purchases.
Oil prices are falling on Tuesday after rising the day before. The pressure on the market is exerted by continuing fears of a decrease in demand due to strict quarantine restrictions in China. The European Union, meanwhile, is preparing a plan to reduce energy consumption in the face of falling gas supplies from Russia.
“We do not think that we can expect a sustainable rally in the market in the near future,” Morgan Stanley’s expert review, quoted by Bloomberg, says. is already reflected in market statistics, and China is a particularly important contributor.”
The cost of November futures for Brent crude on the London ICE Futures exchange by 8:10 am CST on Tuesday is $93.7 per barrel, which is $0.3 (0.32%) lower than the closing price of the previous session. As a result of trading on Monday, these contracts rose by $1.16 (1.3%) to $94 per barrel.
The price of futures for WTI oil for October in the electronic trading of the New York Mercantile Exchange (NYMEX) is $87.58 per barrel by this time, which is $0.20 (0.23%) lower than the final value of the previous session. By the close of the market the day before, the value of these contracts increased by $0.99 (1.1%) to $87.78 per barrel.
The US reaffirmed on Monday that it does not see the possibility of reaching an agreement on the restoration of the Joint Comprehensive Plan of Action soon.
US Secretary of State Anthony Blinken said that he considers the restoration of the JCPOA in the near future unlikely due to Tehran’s position. Last Saturday, Germany, France and the UK expressed “serious doubts” about Iran’s sincerity in seeking to renew the JCPOA and warned that the country’s stance jeopardized the prospects for a deal.
