Oil prices stable as market balances recession fears with tight supply

An aerial view exhibits oil tanks of Transneft oil pipeline operator on the crude oil terminal Kozmino on the shore of Nakhodka Bay close to the port metropolis of Nakhodka, Russia June 13, 2022. Image taken with a drone. REUTERS/Tatiana Meel

LONDON, June 20 (Reuters) – Oil costs had been steady on Monday, struggling to reverse final week’s losses because the market balanced tightening provides with considerations about slowing world financial development.

Brent crude futures had been down 14 cents, or 0.12%, at $112.98 a barrel by 1246 GMT. Entrance-month costs tumbled 7.3% final week for his or her first weekly fall in 5.

U.S. West Texas Intermediate crude was up 13 cents, or 0.12%, at $109.69. Entrance-month costs dropped 9.2% final week for the primary decline in eight weeks.

“Friday’s steep worth fall will be seen as a delayed response to the considerations about recession which have already been weighing on the costs of different commodities for a while,” stated Commerzbank analyst Carsten Fritsch.

Analysts and traders stated they imagine a recession is extra doubtless after the U.S. Federal Reserve accredited on Wednesday the most important rate of interest enhance in additional than 1 / 4 of a century in an effort to include a surge in inflation.

Comparable tightening approaches by the Financial institution of England and Swiss Nationwide Financial institution final week ensued. learn extra

Brent crude futures on Monday touched their lowest in a month, however some analysts anticipate the droop to be short-lived.

“Provides will stay tight and proceed supporting excessive oil costs. The norm for ICE Brent remains to be across the $120/bbl mark,” stated PVM analyst Stephen Brennock.

Western sanctions have diminished entry to grease from Russia after its invasion of Ukraine, which Russia calls a “particular operation”.

Whereas China’s crude oil imports from Russia in Might soared 55% from a yr earlier to a document excessive, displacing Saudi Arabia as the highest provider, the nation’s export quotas have resulted in declining oil product shipments.

Tight refined merchandise markets have supported oil costs. learn extra

Analysts anticipate restricted summer time will increase from the Group of the Petroleum Exporting Nations (OPEC) and its allies, a bunch recognized collectively as OPEC+.

Libya’s oil manufacturing has remained risky following blockades by teams within the nation’s east, with its output most just lately pegged at 700,000 per day. learn extra

In the meantime, prospects are dwindling for Iranian sanctions reduction that might end in a significant enhance within the nation’s crude exports. learn extra

There was some mitigation for tight provide with the discharge of strategic petroleum reserves, led by the USA. U.S. manufacturing can also be climbing, in response to rig depend information from vitality providers agency Baker Hughes Co . learn extra

Further reporting by Florence Tan and Isabel Kua in Singapore
Modifying by Jan Harvey and David Goodman

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