Oil prices continue to decline on Tuesday after a 3% decline the day before following OPEC’s worsening forecast of oil demand.
The oil market is also pressured by weak statistical data from China, which increased traders’ pessimism about demand prospects.
China’s industrial output growth slowed in October while retail sales fell for the first time in five months, China’s State Statistics Office (SSC) reported on Tuesday.
January Brent crude futures on London’s ICE Futures exchange stood at $92.88 a barrel by 8:15 a.m. KSC on Tuesday, down $0.26 (0.28%) from the previous session’s close. Those contracts fell $2.85 (3%) to $93.14 a barrel at the close of trading on Monday.
The price of WTI futures for December at electronic trades of NYMEX fell by that time by $0.52 (0.61%) to $85.35 per barrel. By the close of previous trading, those contracts had fallen $3.09 (3.5%) to $85.87 a barrel.
“Weak statistical data from China only confirms the view that oil demand in the country will remain weak as long as tight quarantine restrictions persist,” notes Vanda Insights founder Vandana Hari in Singapore, cited by Bloomberg.
On the eve of OPEC lowered its estimate of the demand for oil in 2022 by 100 thousand barrels per day – up to 99.57 million bpd, in 2023 – also by 100 thousand bpd, to 101.82 thousand bpd.
Thus, OPEC predicts that global oil consumption in 2022 will increase by 2.55 million bpd, and in 2023 – another 2.24 million bpd, according to a monthly report of the organization.
The International Energy Agency (IEA) will publish its forecasts on Tuesday.
Oil prices rose for the third session in a row thanks to expectations of growth in demand in China as a result of changes in the authorities’ policy to combat COVID-19, as well as new measures to support the economy.
Last week Beijing announced a cut in mass testing of people for the coronavirus as well as the dissolution of “quarantine camps”. On Saturday, authorities said they were planning further gradual changes that would make the covid restrictions more focused, but not softer.
“China’s adjustment of its ‘zero tolerance’ coronavirus policy sends a strong signal to the oil market,” notes SPI Asset Management analyst Stephen Innes.
The value of January futures for Brent crude oil on London’s ICE Futures exchange is $96.19 a barrel by 7:15 PM on Monday, up $0.2 (0.21%) from the previous session’s closing price. Those contracts rose $2.32 (2.5%) to $95.99 a barrel at the close of trading on Friday.
The price of WTI futures for December at electronic trades of NYMEX grew by that time by $0.14 (0.16%) to $89.1 per barrel. By closing of previous trades the cost of those contracts grew by $2.49 (2.9%) to $88.96 per barrel.
Brent had fallen by 2.6% and WTI by 3.9% at the end of previous week.
The increase in oil consumption in China may coincide with a reduction in supply in the market in connection with the forthcoming entry into force of the European embargo on imports of Russian oil and reduce OPEC production +, notes Bloomberg.
U.S. Treasury Secretary Janet Yellen said over the weekend that a European embargo on oil purchases from Russia that enters into force Dec. 5 will “very likely” force Moscow to sell some oil at a price no higher than the ceiling set by the United States and its allies, if Russia wants to avoid a significant reduction in oil exports.
Oil prices are declining on Monday morning after a strong growth following last week’s results, driven by hopes for a softening of the approach of the Chinese authorities to combat the coronavirus.
The price of January futures for Brent at London’s ICE Futures Exchange stood at $97.59 per barrel by 7:06 a.m., down $0.98 (0.99%) from the close of the previous session. At the close of trading last Friday those contracts grew by $3.9 (4.1%) to $98.57 per barrel.
The price of WTI futures for December at the electronic trading on the New York Mercantile Exchange (NYMEX) is $91.44 per barrel by that time, down $1.17 (1.26%) from the previous session. The contract rose by $4.44 (5%) to $92.61 per barrel at the end of last session.
Brent gained 5.1% last week to finish at its highest level since late August, while WTI gained 5.4%.
The Wall Street Journal wrote last Friday, citing several sources, that Zeng Guang, a former top epidemiologist at China’s Center for Disease Control and Prevention (CDCP), said during a conference that a significant change in the country’s authorities’ approach to the coronavirus pandemic was expected in 2023.
Over the weekend, however, Beijing reiterated its intention to adhere “rigorously” to a “zero tolerance” policy for COVID-19.
“Traders believe China will be a driver of fuel demand growth at some point next year on the back of the country’s accelerating economic growth,” said SPI Asset Management managing partner Stephen Innes.
Oil prices rise on Wednesday on data from the American Petroleum Institute (API), which showed a sharp decline in US inventories.
The market is also supported by information from The Wall Street Journal and Bloomberg that Saudi Arabia fears Iranian attacks on facilities within the country, as well as in Iraq. This could lead to interruptions in oil supplies from the region and an increase in oil prices.
The cost of January futures for Brent crude on the London ICE Futures exchange by 8:10 pm on Wednesday is $95.73 per barrel, which is $1.08 (1.14%) higher than the closing price of the previous session. As a result of trading on Tuesday, these contracts rose by $1.84 (2%) to $94.65 per barrel.
The price of futures for WTI oil for December in electronic trading on the New York Mercantile Exchange (NYMEX) increased by this time by $1.2 (1.36%), to $89.57 per barrel. By the close of previous trading, the cost of these contracts rose by $1.84 (2.1%) to $88.37 per barrel.
U.S. oil inventories fell 6.53 million barrels in the week ended Oct. 28, after rising 4.52 million barrels a week earlier, according to API data released on Tuesday.
Official data on energy stocks in the United States will be released by the US Department of Energy on Wednesday at 17:30 square meters.
Experts surveyed by S&P Global Commodity Insights, on average, expect a decline in oil inventories last week by 1.6 million barrels, gasoline – by 1.9 million barrels, distillates – by 1 million barrels.
Oil prices are rising during trading on Tuesday after falling in the previous session.
The cost of January futures for Brent oil on the London ICE Futures exchange by 8:06 am TSK on Tuesday is $93.57 per barrel, which is $0.76 (0.82%) higher than the closing price of the previous session. As a result of trading on Monday, these contracts fell by $0.96 (1%) to $92.81 per barrel.
The price of futures for WTI oil for December in electronic trading on the New York Mercantile Exchange (NYMEX) rose by this time by $0.59 (0.68%), to $87.12 per barrel. By the close of previous trading, the value of these contracts fell by $1.37 (1.6%) to $86.53 per barrel.
Traders are also waiting for meetings of large central banks, writes Bloomberg.
The US Federal Reserve System (FRS) will sum up the results of a two-day meeting on Wednesday against the backdrop of persistently high inflation in the States. On Thursday, the decision on the key rate will be made by the Bank of England.
Support for oil comes from the weakening dollar, which makes commodity prices more attractive to investors.
Meanwhile, the OPEC annual review says that the annual growth in oil demand in the world until 2025 will average 2.1 million b / d, in the next 10 years it will slow down and stabilize by 2035.
According to the report, in 2022, global oil consumption will rise to 100.3 million b/d after 96.9 million b/d in 2021. Further, demand will increase significantly from year to year until 2025: by an average of 2.1 million bpd.
The total oil production quota of the OPEC+ countries has been reduced by 2 million barrels per day since November compared to August levels (coincides with October quotas – IF).
The decision was made by the alliance at a meeting held on October 5, which was held in person for the first time in more than two years.
Oil prices tumble on Monday on signs of a continued slowdown in economic activity in China due to tight quarantine measures to curb the spread of COVID-19.
The Purchasing Managers’ Index (PMI) for China’s manufacturing industry fell to its lowest level since July of 49.2 in October from 50.1 a month earlier, according to data from China’s National Bureau of Statistics (GSO).
An index value below 50 points indicates a decline in activity in the sector.
PMI services in China in October fell to 48.7 points, dropping below 50 points for the first time since May.
The cost of December futures for Brent oil on the London ICE Futures exchange by 8:15 am TST on Monday is $95.03 per barrel, which is $0.74 (0.77%) lower than the closing price of the previous session. As a result of trading on Friday, these contracts fell by $1.19 (1.2%) to $95.77 per barrel.
December futures expire at the close of the market on Monday. More actively traded January contracts fell by $0.69 (0.74%) to $93.08 per barrel.
The price of futures for WTI oil for December in electronic trading on the New York Mercantile Exchange (NYMEX) has decreased by $0.49 (0.56%) by this time, to $87.41 per barrel. By the close of previous trading, the value of these contracts fell by $1.18 (1.3%) to $87.9 per barrel.
As a result of last week, Brent rose by 2.4% per barrel, WTI – by 3.4%. The market closes the month with a rise of almost 10% due to the decision taken by OPEC + to cut production from November by 2 million barrels per day.
“Oil prices are likely to rise as OPEC+ cuts production and the EU embargo on Russian oil purchases (introduced in response to the continuation of the full-scale war unleashed by the Russian Federation against Ukraine – IF) will come into force on December 5,” notes the managing director Vanir Global Markets in Singapore James Whistler quoted by Bloomberg.
