Tag: US West Texas Intermediate crude futures

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.

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.

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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.