Oil remains under pressure as recession fears rise


Oil futures lost ground on Thursday, falling from a three-month high set in early June as concerns about the recession increase.

Price action
  • West Texas Intermediate Crude for August Delivery CL.1,
    -1.02%

    CL00,
    -1.02%

    CLQ22,
    -1.02%
    fell 49 cents, or 0.5 percent, to $ 105.70 a barrel on the New York Stock Exchange.

  • August Brent crude BRN00,
    -1.10%

    BRNQ22,
    -0.72%,
    the world benchmark fell 37 cents, or 0.3%, to $ 108.28 a barrel on ICE Futures Europe.

  • Back to Nymex, July gasoline RBN22,
    -0.91%
    fell 0.3% to $ 3.8245 a gallon, while in August HOQ22 diesel,
    -0.74%
    rose 0.2% to $ 4.2891 a gallon.

  • July natural gas NGN22,
    -9.11%
    down 2.2% to $ 6.709 per million British thermal units.

Market drivers

Crude oil prices have lost ground since trading three-month highs early last week, and analysts have linked the fall in part to concerns that aggressive efforts by the Federal Reserve and other central banks to curb inflation could slow the economy sharply, undermining demand.

Federal Reserve Chairman Jerome Powell, in a testimony before the U.S. Senate Banking Committee on Wednesday, argued that the U.S. economy was robust enough to cope with the Fed’s tightening efforts, but acknowledged that getting the so-called soft landing would be a challenge.

Crude oil prices plummeted on Wednesday as Powell “signaled a possible recession,” said Ipek Ozkardeskaya, a senior market analyst at Swissquote Bank, in a note.

“The next major test for oil bears is the $ 100 level. Many investors do not expect oil prices to fall below that level, which points to a tight global supply and strong demand,” he said. the analyst.

President Joe Biden on Wednesday called for a three-month holiday on federal gas and diesel taxes and urged states to also temporarily lower fuel taxes. Analysts were skeptical that the proposal would get approval, but noted that if enacted it would work to increase demand and could prolong high prices.

Supply data

The American Petroleum Institute reported Wednesday afternoon that U.S. crude oil supply rose 5.6 million barrels during the week ended June 17, according to sources. The API, which released its data a day later than usual due to Monday’s holiday, also showed a weekly increase in inventories of 1.2 million barrels of gasoline, while stocks of distillates fell about 1.7 million barrels.

Oil stocks at the Cushing Delivery Center in Oklahoma fell 390,000 barrels last week, according to sources.

Energy Information Administration inventory data was scheduled for Thursday, but the EIA said Wednesday afternoon that this week’s data will be delayed due to “systems problems.” The government agency says it will publish the data late as soon as possible.

On average, analysts surveyed by S&P Global Commodity Insights said the EIA is expected to show a drop in crude oil stocks by 3.7 million barrels during the week, along with increases in supply of 500,000 barrels of gasoline and 600,000 barrels of distillate.



Source link

Leave a Reply