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Commodities

Oil futures prices are getting cheaper, but the rate of decline is gradually slowing down

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A separate cause for concern is the supply of Russian oil to world markets. Oil futures prices today continue to decline amid concerns about the recession and the news about the restoration of production in Libya.

On July 22, 2022, the price of Brent oil futures for October at the London Stock Exchange ICE Futures decreased by 1.11%, to $98.38/barrel. The price of October oil futures of the Brent brand on the London ICE Futures exchange decreased by 1.11% to $98.38/bbl.

Oil futures WTI for September at electronic trading on the New York Mercantile Exchange (NYMEX) fell by 1.71%, to $94.70/bbl. The price went down by 1.71% to $94.70 per barrel. Brent crude oil went down in price by 2.15% and WTI crude oil – by 2.75%.

Crude Oil Futures: Oil Continues to Decline on July 25, 2022

But the rate of decline is gradually slowing. The price of October oil futures for Brent on ICE Futures fell by 0.92%, to $97.47/bbl. The price of October oil futures of Brent on ICE Futures decreased by 0.92% to $97.47 per barrel. On electronic trading, NYMEX crude oil futures WTI for September fell by 0.89% to $93.86/barrel. US dollars per barrel.

U.S. natural gas futures are near $8.2/bbl. USD/mln Btu (USD 294/1000 m3). On July 22, 2022, natural gas futures for September on the NYMEX rose 4.86% to $8.195/million Btu. USD/mln Btu.

On July 25, 2022, quotes rose 0.65% to $8.248/million Btu. On July 25, 2022, quotes rose 0.65% to $8.248/million Btu. Gas quotations in Europe are holding above $1,700/mln Btu. USD/1000m3. August gas futures on ICE Futures’ TTF hub in the Netherlands were trading at 164.9 Euro/MWh (USD 1763.8/1000m3) by 11:30 Moscow time on July 25, which was 3.15% higher than the previous day’s settlement price.

Oil futures prices start new week with decline 

Oil futures prices start the new week lower on another wave of recession fears and reduced supply worries. The U.S. Federal Reserve (Fed) will meet on July 26-27, 2022 and expect another 75 bps hike in the benchmark interest rate.

A serious tightening of the Fed’s monetary policy, according to many experts, could lead to a recession in the U.S. economy.

The head of the U.S. Treasury D. Yellen, in an interview to TV channel NBC on July 24, admitted that the U.S. economy is slowing down, while denying the recession.

Д. Yellen said that the economy is slowing down against a background of strong recovery growth in the post-pandemic period – in 2021, the U.S. economy grew by 5.5%. According to the minister, the economy is not in a period of recession, but in a period of change; when growth slows down, it is necessary, and appropriate to the situation.

According to the U.S. Department of Commerce, the U.S. economy in the 1st quarter of 2022 decreased by 1.6% in annual terms, and expert estimates indicate that the decline continued into the 2nd quarter of 2022. Thus, the decline lasted for the 2nd consecutive quarter, which is considered the definition of a technical recession.

The market paid attention to data from Libya

National Oil Corporation (NOC) on July 23, 2022 reported that after the lifting of the force majeure on the fields and export ports, daily production increased from 560 kbpd as of July 11 to 860 kbpd as of July 22. Within 2 weeks, NOC plans to increase its oil production to 1.2mbpd.

The growth of active rigs in the USA continues to slow down

According to Baker Hughes, the number of active oil and gas rigs in the US rose by 2 units to 758 in the week ended July 22, 2022. The number of active oil rigs remained unchanged at 599.

The number of gas rigs increased by 2 units to 155. The number of multifunctional rigs remained unchanged at 4.

Separate cause for market concern are Russian oil supplies to the world market

On July 21, 2022, the EU adjusted the sanctions regime against Russia, allowing Russian state companies to supply oil to third countries to limit the risks to global energy security.

However, the market sees risks to Russia’s oil supply due to the US and G7 plans to set ceiling prices for Russian oil by December 2022.

Russia may stop supplying oil to countries that will introduce a price ceiling for Russian oil, which will provoke a rise in global prices.


Commodities

Gold prices muted as rate fears keep traders to the sidelines

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Gold prices muted as rate fears keep traders to the sidelines
© Reuters.

Investing.com– Gold prices moved in a flat-to-low range on Wednesday, extending their recent run of muted performance as anxiety over higher-for-longer U.S. interest rates persisted ahead of key economic readings.

The yellow metal remained squarely within a $2,000 to $2,050 trading range established over the past month, as any upside in gold was largely limited by a string of Federal Reserve warnings that the bank was in no hurry to begin trimming rates early in 2024. Strength in the , which remained near three-month highs, also pressured gold prices.

Still, gold prices also remained firm above the key $2,000 an ounce support level, indicating that fears of a global economic slowdown and geopolitical tensions in Russia and the Middle East were feeding some safe haven demand for the yellow metal.

steadied at $2,030.69 an ounce, while expiring in April fell 0.2% to $2,039.45 an ounce by 00:20 ET (05:20 GMT). 

PCE inflation, GDP data awaited for more cues

Markets were now awaiting key inflation and economic growth readings for more trading cues.

data- the Fed’s preferred inflation gauge- is due on Thursday, and is expected to show inflation remained sticky in January. Such a scenario gives the Fed more impetus to keep interest rates higher for longer.

Several Fed officials also warned this week that sticky inflation will keep the Fed from lowering interest rates early in 2024. 

Before the inflation data, a second reading on fourth-quarter is due later on Wednesday, and is expected to show some cooling in economic growth.

But the U.S. economy is still expected to remain well ahead of its developed world peers, giving the Fed enough headroom to keep rates higher for longer. 

Higher rates herald more pressure on gold, given that they increase the opportunity cost of buying bullion. Other precious metals also retreated on this notion, with falling 0.5% to $892.05 an ounce, while fell 0.7% to $22.602 an ounce on Wednesday. 

Copper prices dip, China PMIs awaited      

Among industrial metals, expiring in March fell 0.4% to $3.8390 a pound. 

The red metal saw a strong run-up in recent weeks on optimism over more stimulus measures in top importer China.

But this rally will be tested on Friday with the release of closely-watched data from the country, which is expected to provide more cues on the state of business activity through February. 

Readings for January showed little improvement in the economy.

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Commodities

Oil rises more than $1/bbl as OPEC+ mulls extending output cuts

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Oil rises more than $1/bbl as OPEC+ mulls extending output cuts
© Reuters. FILE PHOTO: Oil rig pumpjacks, also known as thirsty birds, extract crude from the Wilmington Field oil deposits area near Long Beach, California July 30, 2013. REUTERS/David McNew//File Photo

By Arathy Somasekhar

HOUSTON (Reuters) – Oil prices rose more than $1 a barrel on Tuesday as sources said OPEC+ is considering extending voluntary oil output cuts into the second quarter to provide additional support.

futures rose $1.12, or 1.4%, to $83.65 a barrel, while U.S. West Texas Intermediate crude futures (WTI) were up $1.29, or 1.7%, at $78.87.

The Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, agreed in November to voluntary cuts totalling about 2.2 million barrels per day (bpd) for the first quarter this year, led by Saudi Arabia rolling over its own voluntary cut.

The producer group could keep the additional cuts in place until the end of the year, two of the sources told Reuters.

“We are going to see some tight supplies down the road,” said Dennis Kissler, senior vice president of trading at BOK Financial.

“OPEC is looking for mid-$80s, may be around $85 a barrel on Brent. If we stay below that, they will curtail production all the way to the year end,” Kissler added.

Also supporting prices on the supply side, Israel and Hamas, as well as Qatari mediators, all sounded notes of caution about progress towards a truce in Gaza, after U.S. President Joe Biden said he believed a ceasefire could be reached in under a week to halt the war for Ramadan.

Yemen’s Houthi spokesperson said the group’s operations in the Red Sea would stop only when Israeli “aggression” against Gaza ends. Houthi missile and drone attacks on international shipping have driven up the cost of transporting energy products and contributed to a tighter market.

In the U.S., crude inventories were expected to have risen about 2.7 million barrels last week, while distillates and gasoline stockpiles were seen falling, a Reuters poll showed.

The American Petroleum Institute will release the industry group’s weekly inventories data at 4:30 p.m. EST (2130 GMT), followed by the government’s report on Wednesday morning.

Meanwhile, the 3-2-1 U.S. refinery crack spread , a proxy for refining margins, rose to their highest in more than five months. The surge suggests increased profitability for refineries amidst robust consumer demand for petroleum products.

Markets expect to see some improvement in Chinese oil demand as improving travel demand over the Lunar New Year holiday outweighed worries of slowing macro-economic indicators.

Russian authorities announced a six-month ban on gasoline exports from March 1 to compensate for rising demand and to allow for refinery maintenance.

Global crude oil markets were expected to be fairly stable this year at around $80 a barrel, Russel Hardy, CEO of oil and gas trader Vitol, said.

Speaking at the Energy Institute conference, Hardy also said global oil demand was expected to peak in the early 2030s.

Both oil benchmarks had settled more than 1% higher on Monday after declines of 2-3% over the previous week as markets factored in a greater likelihood that cuts to interest rates might take longer to come than previously expected.

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Commodities

Oil falls 1% on Fed rate cut caution and stocks build

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Oil falls 1% on Fed rate cut caution and stocks build
© Reuters. Oil, miniatures of oil barrels and U.S. dollar banknote are seen in this illustration taken, June 6, 2023. REUTERS/Dado Ruvic/Illustration/Files

By Paul Carsten

LONDON (Reuters) -Oil prices pulled back on Wednesday as the prospect of delays to U.S. interest rate cuts and a jump in stocks that trounced expectations offset a boost from a potential extension to OPEC+ supply curbs.

futures fell 76 cents, or 0.91%, to $82.89 a barrel by 1227 GMT. U.S. West Texas Intermediate futures (WTI) were down 83 cents, or 1.05%, at $78.04. Both benchmarks had fallen $1 in earlier trading.

Vandana Hari, founder of oil market analysis provider Vanda (NASDAQ:) Insights, attributed the price falls to profit-taking plus a combined response to a surge in U.S. crude stocks and continuing hopes of a Gaza ceasefire deal in coming days.

U.S. crude stocks showed an 8.43 million barrel build in the week ended Feb. 23, according to market sources citing American Petroleum Institute (API) figures on Tuesday. 

That shattered expectations of a 1.8 million barrel build, according to analysts polled by Reuters on Monday.

Federal Reserve Governor Michelle Bowman had signalled on Tuesday that she was in no rush to cut U.S. interest rates, particularly given continuing inflation risks. Higher-for-longer rates could dampen economic growth and suppress demand for oil.

Due Thursday is the January U.S. personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation and a key factor in rate decisions.

“The power of inflationary expectations must not be underestimated,” said Tamas Varga of oil broker PVM in a note on Wednesday. “In case tomorrow’s U.S. PCE reading comes in above expectations, a temporary top might have been found” for oil.

Brent and WTI futures rose more than $1 a barrel on Tuesday after Reuters reported that the Organization of the Petroleum Exporting Countries and allies led by Russia (OPEC+) will consider extending voluntary oil output cuts into the second quarter. 

Analysts at ANZ Research said that such a move by OPEC+ would be likely to tighten the market.

Russian authorities on Tuesday announced a six-month ban on gasoline exports from March 1 to compensate for rising demand from consumers and farmers and to allow for planned refinery maintenance.

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