The value of January futures on Brent crude at London’s ICE Futures Exchange stood at $90.27 a barrel by 7:10 a.m. KSC on Friday, $0.49 (0.55%) above the previous session’s closing price. Those contracts fell by $3.08 (3.3%) to $89.78 a barrel at the close of trading on Thursday.
The price of WTI futures for December at electronic trades of NYMEX grew by that time by $0.67 (0.82%) to $82.31 per barrel. By the close of previous trading the cost of those contracts fell by $3.95 (4.6%) to $81.64 a barrel.
Since the beginning of this week Brent has lost about 6% and WTI – 7.5%.
Weak expectations of traders regarding the prospects for oil consumption contributed to the decline in prices. Experts don’t expect rapid recovery of demand for fuel in China, where there was renewed growth of COVID-19, notes Bloomberg agency. In addition, analysts at JPMorgan Chase & Co. forecast a “soft recession” in the U.S. economy next year due to the Federal Reserve’s (Fed) raising the benchmark interest rate.
“The oil market can’t ignore the deteriorating demand outlook in the world’s two largest economies,” said Edward Moya, chief energy sector analyst at Oanda Corp. – Demand remains low, even despite the approaching entry into force of the embargo on Russian oil supplies to the European Union.”
Oil prices continue to fall Thursday morning on weakening geopolitical tensions.
The cost of January futures for Brent on London’s ICE Futures Exchange stood at $91.97 a barrel by 7:22 a.m. Kk, down $0.89 (0.96%) from the previous session’s closing price. At the close of trading on Wednesday those contracts have fallen by $1 (1.1%) to $92.86 per barrel.
The price of WTI futures for December at electronic trades on the New York Mercantile Exchange (NYMEX) is $84.53 per barrel by that time, down $1.06 (1.24%) from the previous session. The day before, the contract fell $1.33 (1.5%) to $85.59 a barrel.
“Prices remain in negative territory as the market has largely ignored various geopolitical factors like Russian-related tensions and focused on more bearish factors such as signals of weakness in the Chinese economy,” Kpler senior oil analyst Matt Smith wrote.
Even the U.S. Department of Energy’s data, released the day before, failed to support the oil market, according to which the country’s commercial oil reserves fell by 5.4 million barrels last week, while analysts had expected a more moderate decline of 1.9 million barrels.
Gasoline inventories increased by 2.21 million barrels and distillates by 1.12 million barrels. Experts were expecting an increase in gasoline stocks by 200 thousand barrels and a decrease in distillate stocks by 1 million barrels.
Oil prices are rising moderately on Friday morning after the first rise in four sessions the previous day, caused by a sharp weakening of the dollar.
The cost of January futures for Brent on London’s ICE Futures Exchange stood at $93.92 a barrel by 7:05 a.m. Ksk, $0.25 (0.27%) above the previous session’s closing price. Those contracts rose $1.02 (1.1%) to $93.67 a barrel at the close of trading on Thursday.
The price of WTI futures for December at electronic trades on the New York Mercantile Exchange (NYMEX) is $86.72 per barrel by that time, which is $0.25 (0.29%) above the final value of the previous session. The contract rose by $0.64 (0.8%) to $86.47 per barrel on Thursday.
The index calculated by ICE, which shows the dollar’s dynamics against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona), fell about 2% the previous day after data on a sharp slowdown in U.S. inflation. U.S. consumer prices (CPI) rose 7.7% in October compared to the same month a year earlier after rising 8.2% in September. Thus, inflation slowed to its lowest since January and was well below market forecasts.
“The consumer price index came in below forecasts, and that eased some of the negative factors for oil, such as the strong dollar and fears of more aggressive Fed rate hikes,” said Price Futures Group senior analyst Phil Flynn.
“At the same time, uncertainty over China’s coronavirus policy persists,” the expert added. – It seems to me that once we see signs that the Chinese economy is starting to open up, that will radically change the dynamics and push oil prices up.”
Oil prices began to decline on Thursday, falling for the fourth consecutive session on signals of expanding quarantine restrictions in China.
January futures for Brent on the London ICE Futures exchange by 14:01 Moscow time fell by $0.80 (0.86%) to $91.85 per barrel. Brent quotes fell below $92 per barrel for the first time since the end of October.
Quotes for December futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) by that time fell by $0.99 (1.15%) to $84.84 per barrel.
The day before, the price of Brent fell by 2.8%, WTI fell by 3.5%.
China introduces quarantine measures in a number of major cities, including Beijing, amid a jump in the incidence of COVID-19 in the country to the highest level in six months, Bloomberg reports. In particular, the restrictions affected the city of Chongqing with a population of more than 32 million people, which faced the sharpest increase in infections in more than a year.
China is the world’s largest importer of fuel, and market participants fear that lockdowns will put additional pressure on the economy and energy demand in the country, Barron’s notes.
In addition, on Wednesday it became known that US commercial oil inventories increased by 3.92 million barrels last week to 440.76 million barrels. This is a record figure since July 2021. Experts polled by Bloomberg expected an average increase in stocks of only 250 thousand barrels.
Traders are also waiting for the report on October inflation in the US, which will be released on Thursday and may affect the policy of the Federal Reserve. Analysts surveyed by Trading Economics expect a slowdown in inflation last month to 8% from September’s 8.2%.
Oil prices increased on Tuesday on the news about the growth of number of coronavirus in China.
January futures on Brent crude oil on London’s ICE Futures Exchange fell by $0.96 (0.98%) to $96.96 per barrel by 12:51 pm (EET).
By the same time quotations of futures on WTI for December dropped by $1.19 (1.30%) to $90.60 per barrel in electronic trading on the New York Mercantile Exchange (NYMEX).
The day before Brent price went down by 0.7% and WTI, by 0.9%.
On Monday over 7 thousand new cases of COVID-19 were registered in China, which is the maximum in 6 months. In this regard, Beijing confirmed that it intends to continue mass testing and introduction of lockdowns to curb the spread of the coronavirus.
Oil demand in China, the world’s largest fuel importer, is one of the key factors influencing oil market dynamics.
“The market believes that if China opens its economy, it will sharply reduce the oil surplus in the market and put upward pressure on futures,” said Price Futures Group analyst Phil Flynn.
In addition, traders expect a partial embargo on Russian oil supplies to Europe, imposed in response to Russia’s continued full-scale war against Ukraine, to take effect soon. “Many expect the battle for free barrels to begin in December, especially in the eurozone,” said Bob Yager of Mizuho.
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.
