Oil prices are falling on Tuesday after a slight rise in the previous session amid decisions by Saudi Arabia and Russia to extend voluntary production cuts.
The cost of January futures for Brent crude oil on the London ICE Futures exchange as of 7:10 a.m. on Tuesday amounted to $84.77 per barrel, which is $0.41 (0.48%) lower than at the close of the previous session. On Monday, the price of these contracts rose by $0.29 (0.3%) to $85.18 per barrel.
December futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) fell by $0.36 (0.45%) to $80.46 per barrel by this time. As a result of the previous trading, the value of these contracts increased by $0.31 (0.4%) to $80.82 per barrel.
The market is under pressure from fears of a weakening global economy and, consequently, oil demand. “Weak economic expectations are holding back the oil market and justifying the position of OPEC+ countries limiting production,” OANDA analyst Craig Earlam said, as quoted by Market Watch.
Last weekend, it became known that Saudi Arabia decided not to change the volume of voluntary oil production cuts and will keep it at 1 million bpd until the end of 2023.
In December, Riyadh may review the parameters of the restrictions to make a decision either to deepen the reduction or to increase production, the Saudi state agency reported on Sunday, citing an official source in the country’s Energy Ministry.
Saudi state-owned Saudi Aramco said on Monday that it will keep the price of the main grade of oil supplied to Asia, Arab Light, unchanged in December. The price of this grade for Asian buyers has been rising for five months in a row.
The Russian Federation will extend until the end of December 2023 an additional voluntary reduction in the supply of oil and oil products to world markets by 300 thousand barrels per day, which came into effect in September and October 2023.
Oil prices are rising on Monday after a sharp decline last week.
The cost of January futures for Brent on the London ICE Futures exchange as of 7:10 a.m. on Monday amounted to $85.3 per barrel, which is $0.41 (0.48%) higher than at the close of the previous session. On Friday, the price of these contracts fell by $1.96 (2.3%) to $84.89 per barrel.
December futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) rose by $0.5 (0.62%) to $81.01 per barrel by this time. As a result of the previous trading, the value of these contracts fell by $1.95 (2.4%) to $80.51 per barrel.
Last week, Brent lost 4.8%, WTI – 5.9%, according to Dow Jones.
Concerns about the escalating conflict in the Middle East have eased somewhat, and traders’ attention has shifted to the prospects for oil supply and demand on the global market, Market Watch notes.
On Sunday, the Saudi state agency reported, citing an official source in the Ministry of Energy, that the country would not change the volume of voluntary oil production cuts, and would keep it at 1 million bpd until the end of 2023. At the same time, the source noted that in December, Saudi Arabia will review the parameters of the restrictions in order to make a decision either to deepen the reduction or increase production.
Oil prices are falling on Monday, despite Israel’s expansion of ground operations in the Gaza Strip, to which Iran has already responded with threats.
Israeli Prime Minister Benjamin Netanyahu announced over the weekend that the country’s authorities had decided to move to the second phase of the operation, which will involve more troops directly in the Gaza Strip. Earlier, the Israeli Defense Forces (IDF) conducted a series of raids in the Gaza Strip.
Oil prices are falling as Israel “seems to be taking a cautious approach to the situation, which gives hope that the worst-case scenario of the conflict will not materialize,” said Stephen Innes, managing partner at SPI Asset Management. Investors, however, should remember “that this is likely to be a long and protracted conflict,” the expert said, as quoted by Market Watch.
The cost of December futures for Brent crude oil on the London ICE Futures exchange as of 7:15 a.m. on Monday is $89.27 per barrel, which is $1.21 (1.34%) lower than at the close of the previous session. On Friday, the price of these contracts increased by $2.55 (2.9%) to $90.48 per barrel.
December futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) fell by $1.3 (1.52%) to $84.24 per barrel by this time. As a result of the previous trading, the value of these contracts increased by $2.33 (2.8%) to $85.54 per barrel.
Over the past week, Brent fell by 1.8% and WTI by 2.9%.
Investors are most concerned about the possibility of Iran’s direct involvement in the conflict between Israel and Hamas. Tougher sanctions on Iranian oil could lead to a reduction in the supply of raw materials on the market by 1 million barrels per day. If the conflict escalates, the country could threaten transportation hubs and oil infrastructure in the region, Market Watch notes.
Benchmark oil prices are little changed on Monday morning after rising on Friday and throughout last week.
The price of December futures for Brent on the London ICE Futures exchange at 8:10 a.m. is $90.92 per barrel, which is $0.03 (0.03%) higher than at the close of the previous session. Last Friday, these contracts increased in price by $4.89 (5.7%) to $90.89 per barrel.
Quotes for November futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) by this time decreased by $0.01 (0.01%) to $87.68 per barrel. At the end of the previous session, they rose by $4.78 (5.8%) to $87.69 per barrel.
Over the past week, Brent prices rose by 7.5% and WTI by 5.9%.
The sharp jump in oil prices on Friday was caused by rising geopolitical risks, FXTM’s Lukman Otunuga told MarketWatch.
Meanwhile, data from the oilfield services company Baker Hughes showed that over the past week, the number of active oil rigs in the United States increased by 4 to 501 units. The number of gas rigs decreased by 1 to 117.
Oil prices are falling on Thursday on the back of data from the American Petroleum Institute (API), which showed a steady increase in US stocks.
According to API estimates, US oil reserves jumped by 12.94 million barrels in the week ended October 6, the highest since early January.
The official report of the US Department of Energy on energy reserves in the country will be released on Thursday at 18:00 GMT.
The cost of December futures for Brent oil on the London ICE Futures exchange as of 8:15 a.m. is $85.6 per barrel, which is $0.22 (0.26%) lower than at the close of the previous session. On Wednesday, the price of these contracts fell by $1.83 (2.1%) to $85.82 per barrel.
Futures for WTI for November in electronic trading on the New York Mercantile Exchange (NYMEX) fell by $0.32 (0.38%) to $83.17 per barrel by this time. As a result of previous trading, the value of these contracts decreased by $2.48 (2.9%) to $83.49 per barrel.
Traders are focused on the situation in the Middle East. Israel is not a major oil producer, but investors fear an escalation of the conflict in the region, given media reports that Hamas’ actions against Israel were planned with the assistance of Iran.
“Currently, the risks to the oil market are low,” says Brian Swan, chief commodities analyst at Schneider Electric. – “However, there is a slight possibility of a price increase as the US closely assesses Iran’s ties to Hamas.
“If Washington decides to restrict Iran’s oil exports more tightly, it could change the market situation,” Market Watch quotes Swan as saying.
In 2022-2023 marketing year (MY), the planted area and production of high-oleic sunflower in Ukraine were the lowest in recent years.
According to the analytical agency UkrAgroConsult, in 2023-2024 MY the planted area is expected to increase slightly, but the production figures will remain extremely low.
“Before the war, the processing of high oleic sunflower reached almost 500 thsd tonnes, which is a good result for such a niche segment. Unfortunately, due to the war, Ukraine has lost both the results gained over the years and its share in the global high-oleic oil market,” the analysts stated.
They noted that high oleic oil remains an export-oriented commodity and almost all of it is exported.
The key issues remain the war, instability in the grain corridor and the ban on imports of agricultural products from Ukraine to Eastern Europe, which will affect the market of high-oleic sunflower, the experts emphasized.
However, according to analysts, the main factor limiting the expansion of the area under high-oleic sunflower in Ukraine is the unstable margin for agricultural producers.
“Sometimes low or no premium entails selling high-oleic seeds at the price of conventional raw materials, which does not always cover the cost of production. This leads to the refusal of agricultural producers to grow this type of sunflower or to reduce the area,” UkrAgroConsult emphasized.
The analysts reminded that before the war, the crushers encouraged farmers to grow high oleic sunflower: they offered to enter into forward agreements, provided seeds for growing with the subsequent purchase of raw materials with a premium.
“Starting from 2023-2024 MY, Ukraine will see a gradual resumption of high-oleic sunflower processing and oil refining, but it is still far from reaching the pre-war levels,” UkrAgroConsult summarized.
