Oil prices are falling on Monday after a strong rise at the end of last week.
The cost of September futures for Brent on the London-based ICE Futures exchange at 8:15 a.m. on Monday is $80.95 per barrel, down $0.12 (0.15%) from the previous session’s closing price. On Friday, these contracts rose $1.43 (1.8%) to $81.07 per barrel.
The price of WTI oil futures for September at the electronic trading of the New York Mercantile Exchange (NYMEX) fell by $0.14 (0.18%) to $76.93 per barrel. At the end of previous trading, the cost of these contracts rose by $1.42 (1.9%), to $77.07 per barrel.
At the end of last week Brent rose by 1.5%, the cost of WTI rose by 2.3%, to the maximum since April 25.
Traders’ attention this week is focused on the Federal Reserve (Fed) meeting, which is expected to raise the rate by another 25 basis points. Continued tightening of monetary policy by the U.S. central bank raises the likelihood of a downturn in the economy and, consequently, lower demand for oil.
“Expectations of a new rate hike by the Fed are putting some pressure on the oil market, however, I believe that this event is largely already priced in,” notes Warren Patterson, who is responsible for commodities strategy at ING Groep NV.
The market is supported by expectations of lower supply amid Saudi Arabia’s production cuts.
The head of the International Energy Agency Fatih Birol said on Bloomberg TV at the weekend that due to production cuts by a number of countries, the oil market may face a deficit in the second half of the year even though there is no significant growth in demand in China.
Kernel Agroholding, one of the largest in Ukraine, processed 650.4 thousand tons of sunflower seeds in the fourth quarter of fiscal year 2023 (April-June), a 4-fold increase compared to the same period last FY.
According to the company’s report, processing was down 13% quarter-on-quarter, reflecting the usual sunflower seed shortage near the end of the season, which forced three of the group’s six operating plants to temporarily stop processing oilseeds in May-June.
“Two processing plants owned by the Group remain inaccessible in the high-risk area of the Kharkiv region with regular shelling by Russian occupiers,” the report states.
Overall, in 2023 FG processing grew by 15% to 2.51 million tons.
According to the report, vegetable oil sales in April-June 2023 increased by 14% quarter-on-quarter to 312,700 tons, including 21,000 tons of bottled sunflower oil, and the growth was fivefold compared to the fourth quarter of last year.
“The group continues to prioritize vegetable oil and meal exports over grain exports, given the more attractive margins in the oilseed processing value chain compared to grain export operations,” it said.
For the entire 2023 FY, sales reached 1 million 132.7 thousand tons, exceeding the previous FY by 17%.
It is pointed out that Kernel’s silo loadings in the fourth quarter of FY 2023 were seasonally insignificant at 98,000 tons, 50% higher than the fourth quarter of last year. As a result, total intake during FY 2023 was 2.83 million tons, down 32% from FY 2022.
According to the report, the transshipment volume of export terminals in Ukraine in April-June 2023 decreased by 13% quarter-on-quarter to 933.1 thousand tons, while there was no transshipment in the same period last year.
Overall for FY 2023, Kernel terminals transshipped 4 million 437.7 thousand tons of goods, 39% less than a year earlier, which the company attributed to failures in the grain deal.
“Russia terminated the grain deal on July 18, 2023. Thus, the Group’s future ability to export goods through Ukrainian Black Sea ports is unclear,” the report states.
“Kernel” recalled that on July 19, its assets in the port of “Chernomorsk” were subjected to a massive missile attack from Russia. As a result, grain transshipment facilities and grain stored in the port were significantly damaged. According to initial estimates, it will take considerable time to return the assets to operation.
According to the report, the group’s grain exports from Ukraine in the fourth quarter of FY 2023 amounted to 755,000 tons, down 8% from the previous quarter but 6 times higher than in the fourth quarter of FY 2022.
On a year-on-year basis, Kernel’s grain export volumes more than halved year-on-year to 3 million 833.2 thousand tons, the document specifies.
“Kernel” before the war ranked first in the world in the production of sunflower oil (about 7% of world production) and its export (about 12%), and was the largest producer and seller of bottled sunflower oil in Ukraine. In addition, the company was engaged in the cultivation of other agro-products and their sales.
Kernel’s net profit for the first nine months of 2023FY increased by 36% to $437 mln, while revenues fell by 45% to $2.715 bln.
Benchmark crude oil prices are rising moderately on Tuesday morning after declines in the previous two sessions.
The price of September Brent futures on London’s ICE Futures exchange is at $78.68 a barrel by 8:46 a.m. Q2, up 18 cents (0.23%) from the previous session’s close. On Monday, these contracts fell in price by $1.37 (1.7%) – to $78.5 per barrel.
Quotes of futures for WTI oil for August at the electronic trading of the New York Mercantile Exchange (NYMEX) to the specified time rose by 23 cents (0.31%) and amounted to $74.38 per barrel. At the end of the previous session they fell by $1.27 (1.7%) – to $74.15 per barrel.
Oil finished in the negative two last sessions in a row. On the eve, the negative factor was statistical data from China, which indicated the growth of China’s GDP by 6.3% in annualized terms in the second quarter after a rise of 4.5% in January-March. The consensus forecast of experts surveyed by Trading Economics had called for a 7.3% increase.
“Weaker-than-expected macroeconomic data from China and oil market reaction suggest that demand remains the key concern for the market,” said ING Groep NV strategist Warren Patterson. – However, we still maintain a constructive outlook and believe that the gap between supply and demand will narrow significantly in the second half of the year”.
In addition, the decrease was caused by the news of resumption of production at Al Sharara and Al Fil fields in Libya, where production was suspended last week due to protests.
On Tuesday, prices are supported by the forecast of the US Department of Energy, which provides for a decrease in shale oil production in the States in August to 9.4 million barrels per day. If the forecast comes true, the production cut will be recorded for the first time since December last year.
Oil prices of benchmark grades are moderately rising on Thursday morning after rising at the end of the previous session, caused by the fall of the dollar.
The price of September futures for Brent on London’s ICE Futures exchange at 8:18 a.m. Q2 is $80.3 per barrel, up 19 cents (0.24%) from the previous session’s close. On Wednesday, these contracts rose by $0.71 (0.9%) – to $80.11 per barrel, having updated the maximum since the end of April.
Quotes of futures for WTI crude oil for August at the electronic trading of the New York Mercantile Exchange (NYMEX) by the specified time rose by 14 cents (0.18%) and amounted to $75.89 per barrel. At the end of the previous session they rose by $0.92 (1.2%) – to $75.75 per barrel.
On the eve it became known that the growth rate of consumer prices in the U.S. slowed to 3% in June from 4% in May, having updated the minimum since March 2021. Analysts on average expected a decline to 3.1%.
Oil traders are keeping an eye on easing inflationary pressures as this may result in the Federal Reserve (Fed) having no need to raise interest rates further, meaning “the current positive conditions in the economy may persist for some time,” said Colin Cieszynski, senior strategist at SIA Wealth Management.
“This has helped raise demand expectations, while supply from Saudi Arabia and Russia remains subdued,” he added.
The prospect of an imminent end to the U.S. monetary tightening cycle collapsed the dollar, which supported commodity prices. The ICE index, which shows the dollar’s performance against six major currencies, plunged 1.2% the day before, hitting its lowest level in more than a year.
The U.S. Department of Energy report, which indicated a sharp increase in oil reserves in the country last week – by almost 6 million barrels instead of the expected increase by 483 thousand barrels.
Gasoline inventories remained virtually unchanged, while distillate stocks rose by 4.815 million barrels. Experts surveyed by Trading Economics on average forecasted a decrease of 727 thousand barrels and 262 thousand barrels, respectively.
Stocks at the terminal in Cushing, where oil traded on Nymex is stored, decreased by 1.605 million barrels over the week.
Oil prices are rising weakly on Wednesday morning ahead of the publication of the US Department of Energy report on energy stocks in the country.
Traders’ attention is also directed to the data on the dynamics of consumer prices in the States for June, which is expected to influence the decisions of the Federal Reserve at the nearest meetings.
Inflation data will be published at 15:30 Q2, the report of the Ministry of Energy on energy stocks – at 17:30 Q2.
The cost of September Brent crude futures on the London-based ICE Futures exchange at 8:15 Q2 on Wednesday is $79.49 per barrel, up $0.09 (0.11%) from the previous session’s closing price. On Tuesday, these contracts rose $1.71 (2.2%) to $79.4 per barrel.
The price of WTI oil futures for August at the electronic trading of the New York Mercantile Exchange (NYMEX) increased by $0.1 (0.13%) to $74.93 per barrel. The day before, the cost of contracts rose by $1.84 (2.52%), to $74.83 per barrel.
Data from the American Petroleum Institute (API), released on Tuesday night to Wednesday, showed an unexpected increase in U.S. inventories in the week ended July 7. The indicator increased by 3.026 million barrels, while experts surveyed by Trading Economics, on average, expected its decline by 200 thousand barrels.
A week earlier, oil reserves fell by 4.382 million barrels.
Oil prices are rising on Tuesday thanks to China’s announced measures to support the real estate market, whose problems continue to hold back the country’s economic growth.
The People’s Bank of China (Central Bank) will expand its program to support developers, including encouraging banks to extend loans to representatives of the sector to complete housing projects, Market Watch reports.
The attention of traders this week is directed to the data on the dynamics of consumer prices in the U.S. for June, as well as monthly reports of OPEC and the International Energy Agency (IEA).
The cost of September Brent crude futures on the London-based ICE Futures exchange by 8:20 Moscow time on Tuesday is $78.08 per barrel, up $0.39 (0.50%) from the previous session’s closing price. On Monday, these contracts fell $0.78 (1%) to $77.69 per barrel.
The price of WTI oil futures for August at the electronic trading of the New York Mercantile Exchange (NYMEX) increased by $0.41 (0.56%) to $73.4 per barrel. The previous day, the value of these contracts fell by $0.87 (1.2%), to $72.99 per barrel.
“New stimulus for the Chinese real estate market is supporting the oil market,” said Warren Patterson, who is in charge of commodities strategy at ING Groep NV. – U.S. inflation data to be released on Wednesday could determine the market’s direction in the short term as it will show what to expect from the Fed in the coming months.”
