Oil prices moved lower on Wednesday after an initial rise, with Brent approaching its lowest since the beginning of this year and WTI near its lowest since late last year.
The price of February Brent crude futures on London’s ICE Futures exchange stands at $78.78 a barrel by 1:19 p.m. Wednesday, down $0.57 (0.72%) from the previous session’s closing price. At one point in the session, Brent had fallen to its lowest level since January 3.
The price of WTI crude futures for January on the electronic trading of the New York Mercantile Exchange (NYMEX) fell by that time by $0.47 (0.63%), to $73.78 a barrel. At a certain point in trading, the price of WTI fell to its lowest level since December 2021.
The day before, oil had fallen substantially on growing fears of a downturn in the global economy and, consequently, a decline in demand for oil in 2023.
“There’s still a lot of uncertainty in the markets today,” said Rystad Energy senior vice president Claudio Galimberti.
Both Brent and WTI have lost more than 9% in the past three sessions, despite the easing of quarantine restrictions in China and the entry into force of a European embargo on Russian oil, as well as initiatives to impose a price ceiling on oil from Russia.
Oil prices are falling on Monday amid a general decline in investor appetite for risk in connection with information about the ongoing protests in China against covid restrictions.
As Bloomberg reports, protests were held in cities across the country, including the capital Beijing, as well as Shanghai, Xinjiang and Wuhan, which was originally the epicenter of the spread of COVID-19.
That contributes to a stronger U.S. dollar, which reduces the attractiveness of investing in commodities and also raises the possibility of even more significant tightening of restrictions by Chinese authorities, the agency said.
The value of January futures on Brent crude oil on London’s ICE Futures Exchange by 7:10 a.m. KSC on Monday was $81.31 per barrel, down $2.32 (2.77%) from the previous session’s close. Those contracts fell by $1.71 (2%) to $83.63 per barrel at the close of trading on Friday.
The price of WTI futures for January crude oil fell by $2.31 (3.03%) to $73.97 per barrel at electronic trading on the New York Mercantile Exchange (NYMEX). By closing of previous trades the cost of these contracts fell by $1.66 (2.1%) to $76.28 per barrel.
Brent fell 4.6% and WTI fell 4.8% at the end of last week.
“The outlook for the oil market remains unfavorable and the events of this weekend in China do not add to the positive,” said Warren Patterson, who is in charge of commodity strategy at ING Groep NV in Singapore.
According to the forecast of analytical company Kpler, oil demand in China in the fourth quarter will decrease to 15.11 million barrels per day (bpd) from 15.82 million bpd a year earlier.
Oil prices are weak Thursday morning after a sharp decline in trading on Wednesday amid talks on the introduction of a ceiling on Russian oil prices.
The price of January Brent futures on London’s ICE Futures Exchange stood at $85.12 a barrel by 7:12 a.m. CST, down $0.29 (0.34%) from the previous session’s closing price. At the close of trading on Wednesday these contracts have fallen by $2.95 (3.3%) to $85.41 per barrel.
The price of WTI futures for January at electronic trades of the New York Mercantile Exchange (NYMEX) makes $77.73 per barrel by that time, which is $0.21 (0.27%) lower than the final value of the previous session. The contract fell by $3.01 (3.7%) to $77.94 a barrel at the end of last session.
The U.S. and allied countries are planning to agree on a price ceiling on Russian oil of no more than $70 per barrel, The Wall Street Journal earlier reported, citing sources.
It was expected that a decision could be made as early as Wednesday, but EU countries have so far failed to come to a unified position, Bloomberg reported. According to the agency, the European Commission offered a $65 a barrel level, but Poland and the Baltic states found it too high. In turn, countries with a powerful shipping industry – Greece and Malta – do not want prices below $70.
“The higher the price ceiling, the easier it will be for buyers from India and China to get access to transport, insurance and other services from G7 countries,” Mizuho analysts wrote.
Also, market participants assessed the official data on energy stocks in the United States, which pointed to a sharp decline in oil reserves and an increase in petroleum products stocks last week.
Commercial oil inventories in the U.S. last week decreased by 3.69 million barrels, data from the weekly report of the U.S. Department of Energy showed. Experts had expected a decline of 2.61 million barrels.
Meanwhile, marketable gasoline inventories rose by 3.06 million barrels and distillates by 1.72 million barrels. Analysts were expecting the growth of the first indicator by 1.15 million barrels, the second – by 650 thousand barrels.
Oil prices are falling moderately on Wednesday morning after a rise in the previous session, during which quotations renewed a three-week low.
The value of January futures for Brent on London’s ICE Futures Exchange stood at $93.28 a barrel by 7:08 a.m., down $0.58 (0.62%) from the close of the previous session. Those contracts rose $0.72 (0.8%) to $91.53 per barrel at the close of trading on Tuesday.
The price of WTI futures for December at electronic trades of the New York Mercantile Exchange (NYMEX) is $86.2 per barrel by that time which is $0.72 (0.83%) lower than the final value of the previous session. The day before contract rose by $1.05 (1.2%) to $86.92 per barrel.
The International Energy Agency (IEA) on Tuesday raised its forecast for oil demand growth by 180,000 bpd in 2022, but the forecast for 2023 was lowered by 40,000 bpd.
The agency also noted that by December 5, when the European embargo on Russian oil imports takes effect, Russia will need to divert another 1.1 million b/d to exports to other countries.
Oil also reacted to news about a rocket explosion in Poland, which killed two people. A number of media wrote that the missile could have come from Russian territory, but the Russian Defense Ministry denied that it was Russian missiles, noting that the military did not strike targets near the Ukrainian-Polish border.
Also, the market is waiting for the weekly U.S. fuel inventories data, which will be published at 5:30 p.m. Wednesday.
The American Petroleum Institute’s (API) report, released the previous evening, showed a 5.8 mln barrel drop in crude stocks last week. Gasoline stocks, according to API data, grew by 1.7 mln barrels, distillates – by 850,000 barrels.
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.
