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Tag: global crude oil prices

  • Crude oil prices slide on concerns over China’s demand; Brent hits $82.74/bbl

    Crude oil prices slide on concerns over China’s demand; Brent hits $82.74/bbl

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    Oil prices dropped in early trade on Tuesday, weighed down by concerns about slowing fuel demand in top crude importer China amid strict COVID-19 curbs.

    Brent crude LCOc1 futures fell 45 cents, or 0.5%, to trade at $82.74 a barrel at 0113 GMT. US West Texas Intermediate (WTI) crude CLc1 futures dropped 51 cents, or 0.7%, to $76.73 a barrel.

    Brent settled down 0.5% the previous day, having slumped more than 3% to $80.61 earlier in the session to its lowest since Jan. 4. WTI settled up 1.3% on Monday, after earlier touching its lowest since December 2021.

    “Bearish moods toward oil prices are spreading in Asia due to concerns about a decline in China’s demand while the rare protests over the weekend also raised fears over the impact on the Chinese economy,” said Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd.

    The rare street protests that erupted in cities across China over the weekend were a vote against President Xi Jinping’s zero-COVID policy and the strongest public defiance during his political career, China analysts said. Beijing has stuck with the zero-COVID policy even as much of the world has lifted most restrictions. Read full story

    Investors also remained cautious ahead of a key meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, on Dec. 4. Analysts at Eurasia Group suggested in a note on Monday that weakened demand out of China could spur OPEC+ to cut output.

    “Losses were limited (on Tuesday) as some investors expect that OPEC and its allies may agree on a production cut in their next meeting to support oil prices,” said Fujitomi Securities analyst Tazawa.

    Markets are also assessing the impact of an upcoming Western price cap on Russian oil.

    Group of Seven (G7) and European Union diplomats have been discussing a cap of between $65 and $70 a barrel, with the aim of limiting revenue to fund Moscow’s military offensive in Ukraine without disrupting global oil markets. Russia calls its actions in Ukraine “a special operation”.

    But EU governments failed to agree on Monday on the cap, with Poland insisting the cap should be set lower than proposed by the G7, diplomats said. Read full story

    The price cap is due to come into effect on Dec. 5, when an EU ban on Russian crude also takes effect.

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  • Crude oil drops more than $1 as China’s COVID protests fuel demand worries; Brent hits $82.62/bbl

    Crude oil drops more than $1 as China’s COVID protests fuel demand worries; Brent hits $82.62/bbl

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    Oil futures fell more than $1 early on Monday as protests in top importer China over strict COVID-19 curbs fuelled demand worries, while investors remained cautious ahead of an agreement on a Western price cap on Russian oil and an OPEC+ meeting.

    Brent crude LCOc1 dropped $1.01, or 1.2%, to trade at $82.62 a barrel at 0110 GMT. US West Texas Intermediate (WTI) crude CLc1 slid $1.09, or 1.4%, to $75.19.

    Both benchmarks, which hit 10-month lows last week, have posted three consecutive weekly declines. Brent ended the latest week down 4.6%, while WTI fell 4.7%.

    “On top of growing concerns about weaker fuel demand in China due to a surge in COVID-19 cases, political uncertainty, caused by rare protests over the government’s stringent COVID restrictions in Shanghai, prompted selling,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

    WTI’s trading range is expected to fall to $70-$75, he said, adding the market could stay volatile depending on the outcome of the OPEC+ meeting and the price cap on Russian oil.

    China, the world’s top oil importer, has stuck with President Xi Jinping’s zero-COVID policy even as much of the world has lifted most restrictions.

    Hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests over China’s strict COVID restrictions flared for the third day and spread to several cities in the wake of a deadly fire in the country’s far west.

    The wave of civil disobedience is unprecedented in mainland China since Xi assumed power a decade ago, as frustration mounts over his zero-COVID policy nearly three years into the pandemic.

    Meanwhile, Group of Seven(G7) and European Union diplomats have been discussing a price cap on Russian oil of between $65 and $70 a barrel, with the aim of limiting revenue to fund Moscow’s military offensive in Ukraine without disrupting global oil markets.

    But a meeting of EU government representatives, scheduled for Nov. 25 evening to discuss the issue, was canceled, EU diplomats said. The price cap is due to come into effect on Dec. 5 when an EU ban on Russian crude kicks off. 

    Investors are also focusing on the next meeting of the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, on Dec. 4.

    In October, OPEC+ agreed to reduce its output target by 2 million barrels per day through 2023.

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  • Crude oil prices slip on OPEC cut in demand forecast, Brent hits $92.75/bbl

    Crude oil prices slip on OPEC cut in demand forecast, Brent hits $92.75/bbl

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    Oil prices extended losses in early Asian trade on Tuesday after OPEC cut its 2022 global demand forecast, while rising COVID-19 case numbers in China clouded the outlook for fuel consumption in the world’s top crude importing nation.

    Brent crude futures LCOc1 fell 39 cents, or 0.4%, to $92.75 a barrel by 0133 GMT after settling down 3% on Monday. US West Texas Intermediate crude CLc1 was at $85.31 a barrel, down 56 cents, or 0.7%, after tumbling 3.5% in the previous session.

    The Organization of the Petroleum Exporting Countries (OPEC) cut its 2022 global oil demand growth forecast for a fifth time since April, citing mounting economic challenges including high inflation and rising interest rates.

    This comes after the International Monetary Fund said on Sunday that the global economic outlook has become gloomier than projected last month, citing a steady worsening in purchasing manager surveys in recent months

    Meanwhile, though investors cheered China’s announcements last week that it would lessen the impact of a strict zero-COVID policy to spur economic activity and energy demand, ANZ analysts said surging case numbers continue to be a key downside risk.

    “The market is currently defying looming supply risks, despite expectations that the latest demand downgrade could be supply-negative for OPEC oil output,” the analysts said, referring to imminent European Union sanctions on Russian oil exports.

    Elsewhere, oil output in the Permian Basin is set to hit another record of 5.499 million barrels per day (bpd) in December, the U.S. Energy Information Administration (EIA) said in its monthly productivity report on Monday.

    However, aging shale regions are showing weaker per-well output, causing overall U.S. crude oil production in shale regions to rise by a mere 91,000 bpd to 9.191 million bpd in December, despite a surge in prices, the EIA said.

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  • Crude oil prices edge lower amid China COVID-19 woes, Brent hits $92.77/bbl

    Crude oil prices edge lower amid China COVID-19 woes, Brent hits $92.77/bbl

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    Oil prices inched lower on Tuesday, extending losses of 1% from the previous session as more extensive COVID-19 curbs in China increased fears of slowing fuel demand in the world’s second-largest oil consumer.

    Brent crude for January delivery was down 4 cents at $92.77 a barrel at 0112 GMT. The December contract expired on Monday at $94.83 a barrel, down 1%.

    US West Texas Intermediate (WTI) crude fell 18 cents, or 0.2%, to $86.35 a barrel.

    COVID-19 curbs in top crude oil importer China forced the temporary closure of Disney’s Shanghai resort on Monday, while production of Apple Inc iPhones at a major contract manufacturing facility could drop by 30% in November.

    “With China sticking to the zero-COVID policy, the oil demand outlook overshadowed a record of US oil export data from last week,” CMC Markets analyst Tina Teng said.

    Strict pandemic restrictions have caused China’s factory activity to fall in October and cut into its imports from Japan and South Korea.

    Also weighing on sentiment was the world’s largest independent oil trader Vitol saying that its sees signs of oil demand destruction, ANZ Research analysts said in a note.

    Pressuring oil prices, US oil output climbed to nearly 12 million barrels per day (bpd) in August, highest since the start of the COVID-19 pandemic, even as shale companies said they do not expect production to accelerate in coming months.

    That is likely to lead to a rise in US crude oil stocks in the week to Oct. 28 of about 300,000 barrels, while distillate and gasoline inventories were expected to fall, a preliminary Reuters poll showed.

    The poll was conducted ahead of reports from the American Petroleum Institute due at 4:30 p.m. EDT (2030 GMT) on Tuesday, and the Energy Information Administration due at 10:30 a.m. (1430 GMT) on Wednesday.

    Brent and WTI benchmarks ended October higher, marking their first monthly gains since May after the Organization of the Petroleum Exporting Countries and its allies including Russia announced plans to cut output by 2 million bpd.

    OPEC raised its forecasts for world oil demand in the medium-and longer-term on Monday, saying that $12.1 trillion of investment is needed to meet this demand despite the transition to renewable energy sources. 

    US President Joe Biden has called on oil and gas companies to use their record profits to lower costs for Americans and increase production, or pay a higher tax rate.

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  • Crude oil prices slide as dollar strengthens; Brent hits $95.62/bbl

    Crude oil prices slide as dollar strengthens; Brent hits $95.62/bbl

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    Oil prices fell on Tuesday, extending nearly 2% losses in the previous session, as a stronger US dollar and a flare-up in COVID-19 cases in China increased fears of slowing global demand.

    Brent crude futures LCOc1 fell 57 cents, or 0.6%, to $95.62 a barrel by 0031 GMT, after falling $1.73 in the previous session.

    US West Texas Intermediate crude CLc1 was at $90.58 a barrel, down 55 cents, or 0.6%, after losing $1.51 in the previous session.

    The US dollar rose for a fourth straight session on Monday as investors braced for high inflation data released this week, leading to expectations of continued aggressive monetary policy from the Federal Reserve. 

    A strong greenback reduces demand for oil by making it more expensive for buyers using other currencies.

    Rate increases to date were starting to slow the economy and the full brunt of tighter policy would not be felt for months to come, Fed Vice Chair Lael Brainard said on Monday. 

    “Strong jobs data has strengthened expectations of another 75 basis points rate hike at next month’s Fed meeting, leaving downside risk for global oil demand,” said ANZ Research analysts in a note.

    The sustained zero COVID-19 policy in China ahead of a Communist Party congress is “not helping” demand, the analysts added.

    COVID-19 cases in the world’s second-largest oil consumer rose to their highest since August. Its services activity in September contracted for the first time in four months, as pandemic restrictions weighed.

    Thousands of cases caused by the highly transmissible Omicron sub-variants BF.7 have been reported in Inner Mongolia since the start of October, turning the region into the country’s latest COVID epicentre.Read full storyRead full story

    Capping losses, the Organization of the Petroleum Exporting Countries and allies including Russia, together known as OPEC+, decided last week to lower their output target by 2 million barrels per day, further raising concerns about tightening oil supplies.

    “The supply issues remain due to sanctions on Russia, especially when the EU bans imports of Russia’s oil towards the year-end,” said CMC Markets analyst Tina Teng.

    EU sanctions on Russian crude and oil products will take effect in December and February respectively while the bloc last week gave its final approval for a new batch of sanctions against Russia including a price cap on Russian oil exports. 

    India maintains a “healthy dialogue” with Russia and will look at what is offered following an announced ownership revamp to the Sakhalin-1 oil and gas project, Petroleum Minister Hardeep Singh Puri told Reuters. 

    On Friday, Russia issued a decree allowing it to seize Exxon Mobil’s 30% stake and gave a Russian state-run company the authority to decide whether foreign shareholders including India’s ONGC Videsh can retain their participation in the project.

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