Oil Slumps on Fears Over Economic Slowdown, Stronger Dollar
08.24.2022 By Ricardo Perez - NEWS

August 24, 2022 [Reuters] – Oil prices bounced off session lows to trade nearly flat in a volatile session on Monday as markets weighed Saudi Arabia’s warning that OPEC+ production could cut output against the possibility of a nuclear deal that could return sanctioned Iranian oil to the market.

 

Brent crude futures for October settled at $96.48 per barrel, down 24 cents, or 0.25%. It had fallen as much as 4.5% earlier in the day, breaking a three-day streak of gains.

U.S. West Texas Intermediate (WTI) crude for September delivery, which expired on Monday, was down 54 cents, or 0.6%, at $90.23. The more active October contract was down 4 cents, or 0.03%, at $90.41.

Saudi Energy Minister Prince Abdulaziz bin Salman said OPEC+ has the commitment, flexibility, and means to deal with challenges and provide guidance including cutting production at any time and in different forms, state news agency SPA reported.

Meanwhile, the leaders of the United States, Britain, France and Germany discussed efforts to revive the 2015 Iran nuclear deal, the White House said on Sunday, which could allow sanctioned Iranian oil to return to global markets.

The U.S. State Department said a nuclear deal was closer now than it was two weeks ago.

Earlier in the session, worries that aggressive U.S. interest rate hikes may lead to a global economic slowdown and dent fuel demand had pushed down prices.

“The near-term fundamentals seem more to the bears until we see some positive economic indications either out of the U.S. or China, which is looking unlikely,” said Dennis Kissler, senior vice president of trading at BOK Financial.

The U.S. Federal Reserve will raise rates by 50 basis points in September amid expectations inflation has peaked and growing recession worries, according to economists in a Reuters poll.

Investors will be paying close attention to comments by Fed Chair Jerome Powell when he addresses an annual global central banking conference in Jackson Hole, Wyoming, on Friday.

Also pressuring prices were worries over slowing fuel demand in China, the world’s largest oil importer, partly because of a power crunch in the southwest.

Beijing cut its benchmark lending rate on Monday as part of measures to revive an economy hobbled by a property crisis and a resurgence of COVID-19 cases.

The dollar index rose to a five-week high on Monday. A stronger greenback is generally bearish as it makes it more expensive for buyers with other currencies in the dollar-denominated oil market.

High natural gas prices exacerbated by reduced supply from Russia is strengthening oil demand, said Ole Hansen, head of commodity strategy at Saxo Bank.

Supply worldwide remains relatively tight, with the operator of a pipeline supplying about 1% of global oil via Russia saying it will reduce output again because of damaged equipment.

OPEC+ produced 2.892 million barrels per day (bpd) below their targets in July, two sources from the producer group said, as sanctions on some members like Russia and low investment by others stymied its ability to raise output.

Pro Trial: Access 10,390 Tank Terminal and Production Facilities

10,390 tank storage and production facilities as per the date of this article. Click on the button and register to get instant access to actionable tank storage industry data

Spark: Spot LNG Shipping Rates Climb to Almost $200,000 Per Day
09.23.2023 - NEWS
September 23, 2023 [LNG Prime]- Spot charter rates for the global liquefied natural gas (LNG) car... Read More
Sempra Gets FERC OK for Port Arthur LNG Expansion
09.23.2023 - NEWS
September 23, 2023 [LNG Prime]- LNG player Sempra Infrastructure, a unit of Sempra, won regulator... Read More
Oil Ends Week Lower as Demand Concerns Face Russia Supply Ban
09.23.2023 - NEWS
September 23, 2023 [Reuters]- Oil prices held steady on Friday but closed the week lower on profi... Read More
TransMontaigne Appoints Randal Maffett as Chief Executive Officer
09.23.2023 - NEWS
September 23, 2023 [Businesswire]- TransMontaigne Partners LLC (“TransMontaigne” or the “C... Read More