Oil futures ended lower on Thursday and recorded losses for the month, as a weekly increase in the supply of gasoline and distillates to the United States raised concerns about the destruction of price-related demand and major oil producers pledged to increase production by 648,000 barrels a day in August, as expected. .
Price action
-
Crude West Texas Intermediate for delivery in August CL.1,
-3.58% CLQ22,
-3.58%
it fell $ 4.02, or 3.7%, to $ 105.76 a barrel on the New York Mercantile Exchange. First-month contract-based prices rose nearly 41 percent so far and gained 5.5 percent during the quarter, but lost 7.8 percent during the month, according to Dow Jones Market Data. -
On the day of expiration, the global reference crude August Brent BRNQ22,
-1.19%
it lost $ 1.45, or nearly 1.3%, to $ 114.81 a barrel on ICE Futures Europe, trading nearly 48% higher in the year and more than 6% during the quarter, but 6, 5% for the month. The most active September contract BRN00,
+ 0.16% BRNU22,
+ 0.16%
it fell $ 3.42, or 3%, to $ 109.03 a barrel. -
Back to Nymex, July gasoline RBN22,
-5.16%
fell 4.6% to $ 3.6498 a gallon, nearly 11% less during the month, while in July, HON22 heating oil,
-3.18%
decreased 3.4% to $ 3.8982 a gallon, losing nearly 5% during the month. Both contracts expired at the end of the session. -
August natural gas NGQ22,
-14.51%
it fell 16.5% to $ 5.424 per million British thermal units, with a monthly loss of more than 33%.
Market drivers
Oil has led the commodity sector’s overall gains so far this year with a tight supply, but prices ended the month down due to recession concerns.
Reads: Energy leads the increase in raw materials with an increase in oil of approximately 50% in the first half of 2022
On Thursday, OPEC +, the Organization of the Petroleum Exporting Countries and its allies, confirmed a proposal to increase production by another 648,000 barrels a day in August, as well as its July increase and in line with its announcement after a meeting in early June. The decision was long awaited.
Still, OPEC + production “seems insufficient to balance the market,” Global X commodity research analyst Roberta Caselli told MarketWatch in emailed comments. “Supply risks still appear high, given dislocated Russian exports and possible disruptions to Libya and Ecuador,” and major OPEC producers, Saudi Arabia and the United Arab Emirates, could “already be operating at almost full capacity “.
“ “The tightness of current supply is likely to balance the market, but the risk of declining demand is real if inflationary pressures persist and consumer strength begins to decline.” ”
Meanwhile, short-term oil demand may improve further due to the “Chinese reopening and revival of summer travel,” Caselli said. She hopes that “the tightness of current supply is likely to balance the market, but the risk of declining demand is real if inflationary pressures persist” and consumer strength begins to decline.
Reads: Below is the extent to which oil could fall into a recession, judging by past experiences.
There are likely to be more restrictions on surplus production capacity and this rigidity “makes the system fragile in the face of further marginal losses,” Hakan Kaya, senior portfolio manager at Neuberger Berman, told MarketWatch. Under these conditions, without any recession, “we expect markets to continue to offer a scarcity premium.”
On Wednesday, the Energy Information Administration released data showing declines in U.S. crude oil supply over the past two weeks, totaling more than 3 million barrels, excluding oil from the Strategic Oil Reserve.
However, the report also showed increases of 2.6 million barrels each for gasoline and distillate supplies for the week ended June 24th. The survey surveyed falls of 875,000 and 525,000 barrels of gasoline and distillates, respectively.
Reads: Gasoline prices have come down, but they probably haven’t reached their peak yet
Refineries operated at 95.0% of their operating capacity last week, the best reading in 30 years, said Phil Flynn, a senior market analyst at The Price Futures Group, in a note. Gasoline production also rose last week, averaging 9.5 million barrels a day and surpassing demand, he said.
Natural gas futures fell more than 16% on Thursday after EIA data showed domestic natural gas supplies rose 82 billion cubic feet during the week ended June 24th. This compared to an average forecast of an increase of 74 billion cubic feet of analysts. consulted by S&P Global Commodity Insights.