Oil prices are declining amid fears of a downturn in the global economy and lower energy demand, Trading Economics reported.
This year will be tougher for the global economy than last year, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said. “We expect a third of the world economy to be in recession,” she said in an interview with CBS.
March Brent crude futures on London’s ICE Futures exchange were priced at $85.51 a barrel at 7:00 ksk, down $0.4 (0.47%) from the previous session’s closing price.
The price of futures on WTI crude oil for February on electronic trade of the New York Mercantile Exchange (NYMEX) decreased by that time by $0.35 (0.44%) – to $79.91 per barrel.
By the end of 2022 Brent quotations went up by about 10%, WTI – by 7%.
The company’s oil price is expected to remain stable on the last working day of the year amid low trading activity, ending the fourth quarter in negative territory, Interfax-Ukraine news agency Interfax reported on Thursday (Dec 2).
Fears that a sharp lifting of quarantine restrictions in China, which has already led to an increase in the incidence of COVID-19, will weaken the country’s economy and, consequently, the demand for oil, put pressure on the market. In addition, investors do not rule out a new wave of coronavirus infection in the world.
Earlier, the Chinese authorities announced that they would resume issuing documents for tourists wishing to travel abroad. The United States and Italy have already announced additional requirements for passengers arriving from China.
Data from the U.S. Department of Energy, released on Thursday, showed an unexpected increase in the country’s oil reserves last week. Reserves rose by 718,000 barrels, while analysts polled by Bloomberg agency forecast an average decline of 1.2 million barrels.
Gasoline inventories decreased by 3.1 million barrels and distillates increased by 283,000 barrels.
The value of March futures on Brent crude oil on London’s ICE Futures Exchange by 7:15 am on Friday stands at $83.8 per barrel, which is $0.34 (0.41%) higher than the price at the close of the previous session. Those contracts fell $0.53 (0.6%) to $83.46 a barrel at the close of trading on Thursday.
The price of WTI futures for February increased by $0.33 (0.42%) up to $78.73 per barrel at electronic trades of NYMEX. By the close of previous trading, those contracts had fallen $0.56 (0.7%) to $78.4 a barrel.
“We have another year ahead of us with serious uncertainty, and the oil market will remain highly volatile,” said Oanda chief analyst Craig Erlam, cited by Bloomberg. – The new year promises many surprises and twists and turns.
Oil prices continue to decline on Thursday with weak trading activity in the last days of the year.
Investors’ optimism connected with expectations of increase of demand for oil after lifting of quarantine restrictions in China was replaced with concerns of new wave of COVID-19 disease in the world.
Earlier Beijing announced its intention to soften the epidemiological requirements for those arriving in the country from January 8. In addition, the Chinese authorities will resume issuing documents for tourists wishing to travel abroad. The U.S. and Italy have already announced additional requirements for passengers arriving from China.
The cost of February futures on Brent oil at London’s ICE Futures Exchange was $83.14 per barrel by 7:15 a.m. KSC on Thursday, down $0.12 (0.14%) from the close of the previous session. Those contracts fell $1.07 (1.3%) to $83.26 a barrel at the close of trading on Wednesday.
The price of WTI futures for February at electronic trades of NYMEX fell by $0.28 (0.35%) by that time to $78.68 per barrel. By the close of previous trading, those contracts had fallen $0.57 (0.7%) to $78.96 a barrel.
“China’s rejection of travel restrictions could trigger a new global wave of COVID-19,” said John Driscoll, director of JTD Energy Services Pte. in Singapore, cited by Bloomberg. – This, in turn, may weaken the demand for oil and lead to lower prices.
On Thursday, traders will focus on the U.S. energy inventory data for the previous week to be published by the country’s Department of Energy at 19:00 MSK.
The American Petroleum Institute (API) report showed that U.S. oil inventories fell by 1.3 million barrels in the week ended December 23, after falling by 3.07 million barrels a week earlier.
Oil prices are rising in the morning trading on Tuesday on information about further weakening of anti-coke measures in China and closure of some refineries in the US due to bad weather.
The price of February futures for Brent crude oil on London’s ICE Futures Exchange stood at $84.4 a barrel by 7:20 a.m. Tuesday, up $0.48 (0.57%) from the close of the previous session. Those contracts rose $2.94 (3.6%) to $83.92 a barrel in trading the previous Friday. There were no oil trades on Monday because of the Catholic Christmas.
The price of WTI crude futures for February increased by $0.5 (0.63%) to $80.06 per barrel in electronic trading on the New York Mercantile Exchange (NYMEX) by that time. By closing of previous trades the cost of these contracts grew by $2.07 (2.6%) to $79.56 per barrel.
Chinese authorities will cancel obligatory quarantine for people arriving in the country from abroad since January 8, Bloomberg informs. In addition, Beijing has downgraded its COVID-19 surveillance, abandoning the legal basis for imposing harsh measures to combat the spread of infection. “Our priorities should shift from preventing and controlling (the coronavirus – IF) to treating it,” said Liang Wannian, head of the COVID-19 expert group under China’s National Health Commission, in an interview for People’s Daily.
Market participants are also following the news from the USA where the production of petroleum products is falling due to the difficult weather conditions in the key regions which were covered by a snowstorm. Thus, production was stopped at two major refineries Motiva Port Arthur and Marathon Galveston Bay in Texas. According to Bloomberg, their capacity is more than 1.8 million barrels per day.
Oil prices are virtually unchanged on Wednesday morning after rising the day before.
The price of February futures for Brent on London’s ICE Futures Exchange at 8:05 a.m. Moscow time is $79.94 per barrel, which is $0.05 (0.06%) lower than at the close of the previous session. Those contracts rose by 19 cents (0.2%) to $79.99 a barrel at the close of trading on Tuesday.
The price of WTI futures for February at electronic trades on the New York Mercantile Exchange (NYMEX) is $76.17 per barrel by that time, which is $0.06 (0.08%) below the final value of the previous session. The contract rose by $0.85 (1.1%) to $76.23 per barrel at the end of last session.
The previous day oil quotations were supported by decline of the US dollar rate, which increased the attractiveness of oil as an object for investments of holders of other currencies.
In addition, investors are following the situation with the coronavirus in China. The removal of quarantine restrictions and government stimulus measures are believed to be positive factors for fuel demand in the long term. At the same time, rising COVID-19 infections are dampening the market’s optimism, MarketWatch notes.
“After a long period of liquidating long positions, the market has become more balanced, and a bullish mood is gradually returning to oil traders,” SPI Asset Management managing director Stephen Innes wrote. – Despite all concerns about the recession in the economy, there are still those who want to buy oil after a decrease in its quotations. This demonstrates that oil is one of the most needed commodities in the world.
At the same time, reduced liquidity in the market, which is traditionally observed at the end of the year, puts pressure on quotations, the expert added.
The ninth package of EU sanctions against Russia adopted on Friday allows Bulgaria, Hungary and Slovakia, which received a reprieve from the European Union’s oil embargo on Russian oil, to export oil products produced from it to Ukraine.
The EU Council resolution published in the EU Official Journal on December 16 says the decision “allows Hungary, Slovakia and Bulgaria to export to Ukraine certain refined products derived from Russian crude oil imported on the basis of the considered derogations (from the embargo – IF), including, if necessary, by transit through other member states.”
Another paragraph of the ruling allows Bulgaria to “export to third countries certain petroleum products derived from Russian crude oil imported on the basis of the derogations under consideration.
The publication attributes this to the need to “reduce environmental and safety risks, as such products cannot be safely stored in Bulgaria.
The document specifies that the respective annual exports should not exceed the average annual volume of exports of such products for the last five years.
