Sun, June 16, 2024

Pressure on the Oil Market Becomes Increasingly More

Wibest – Iran: An crude oil refinery.

On Wednesday, oil prices increased marginally but cautiously as bearish considerations like unclear Chinese demand growth and dropping gas costs offset optimistic signs like declining U.S. crude stocks.

By 0913 GMT, the price of Brent oil futures for December settlement increased by 60 cents, or 0.7%, to $90.63 per barrel. Brent saw a low of $89.32 earlier in the session. The price of a barrel of U.S. WTI crude for November delivery, which is coming to an end on Thursday, was $83.59, up 77 cents or 0.9%. The December contract was up 66 cents or 0.8% at $82.73.

Will There Be an Increase in Supply?

On news that U.S. President Joe Biden intended to release additional barrels from the Strategic Petroleum Reserve, the contracts dropped to their lowest levels in two weeks during the previous session (SPR). Due to the mild weather, full gas storage tanks, and much liquefied natural gas (LNG) ship deliveries, wholesale gas prices in the United Kingdom and the Netherlands decreased this week.

According to PVM analyst Stephen Brennock, the forecast for European gas prices over the next months has taken a hit, with the possibilities for moving from gas to oil. This week, China delayed the release of certain crucial economic data, a rare action that fueled concerns about slow growth. However, there were also some indications of a recovery in Chinese oil demand, such as the extension of import limits for state-run ChemChina and private mega-refiner Zhejiang Petrochemical Corp (ZPC).

The Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, a group known as OPEC+, reduced output by 2 million barrels per day and threatened European Union restrictions on Russian crude and oil products helped stabilize prices.

Sanctions imposed by the EU on Russian oil will go into force in December and February, respectively. A report by UBS analysts explained that there would soon be a disturbance in the supply. Therefore, they anticipate the oil market will tighten even further, obscuring worries about the recession.

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