Oil soars as investors worry about global demand

Crude oil storage tanks are seen in an aerial photograph at the Cushing Oil Hub in Cushing, Oklahoma, USA, April 21, 2020. REUTERS / Drone Base / File Photo

  • Russia says global oil demand may not return to 2019 levels
  • OPEC + struggles to pump more oil to meet growing demand
  • API shows declining crude and fuel sources

NEW YORK, Sept.21 (Reuters) – Oil prices edged up in a roller-coaster session on Tuesday, as concerns about the outlook for global consumption offset the struggle of major OPEC producers to pump enough supply to meet growing demand.

Both benchmarks were at one point up $ 1 a barrel, but Brent crude reduced its gains and stabilized 44 cents at $ 74.36 a barrel, after falling nearly 2% on Monday. .

October’s West Texas Intermediate (WTI) contract, which expired Tuesday, rose 27 cents to $ 70.56 a barrel, after falling 2.3% in the previous session. The most active November contract rose 35 cents a barrel to $ 70.49.

Brent and the November WTI contract had peaked at $ 75.18 per barrel and $ 71.48 per barrel, respectively.

“It seems to be a very nervous trade today,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “It’s a bit of the ongoing concerns about the potential impact of demand going forward.”

The TASS news agency said Russia believes global oil demand may not return to its 2019 peak before the pandemic as the energy balance shifts.

However, the Organization of the Petroleum Exporting Countries and its allies including Russia (OPEC +) struggled to pump enough oil in August to meet current consumption as the world recovers from the coronavirus pandemic. Several countries appeared to have produced less than expected under the OPEC + agreement, suggesting that a supply gap could widen. Read more

Investors in all financial assets have been rocked by the fallout from the Evergrande crisis in China (3333.HK) which has hurt the value of assets in risky markets like stocks. Read more

“Traders were concerned that this would trigger a domino effect in major indebted Chinese companies and a bearish rollover effect for stocks and commodity prices,” said Nishant Bhushan, oil markets analyst at Rystad Energy.

“However, given that all major Chinese banks and credit institutions are government-controlled, there is a silver lining in the market that the world’s second-largest economy would be able to absorb the shockwaves of the Evergrande. “

In addition, the US Federal Reserve is expected to start tightening monetary policy, which could reduce investor tolerance for riskier assets such as oil. Fed policymakers began a two-day meeting on Tuesday. Read more

US oil production is still recovering from the hurricanes that hit the Gulf Coast region. Royal Dutch Shell (RDSa.L), the largest US oil producer in the Gulf of Mexico, said on Monday that damage to offshore transfer facilities by Hurricane Ida will reduce production early next year. Read more

About 18% of the US Gulf’s oil and 27% of its natural gas production went offline on Monday, more than three weeks after Ida.

US stocks of crude oil, gasoline and distillate fell last week, according to market sources, citing figures from the American Petroleum Institute on Tuesday, as many refineries and offshore drilling rigs remained closed after Hurricane Ida.

Crude inventories fell 6.1 million barrels for the week ended September 17. Inventories of gasoline fell by 432,000 barrels and inventories of distillates fell by 2.7 million barrels, according to the data, which requested anonymity.

Official US government data is due Wednesday.

Reporting by Stephanie Kelly in New York; additional reporting by Ahmad Ghaddar in London and Aaron Sheldrick in Tokyo; Editing by Marguerita Choy and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

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