Commodities
Oil prices and the recession graph: What will happen to oil prices this week?
The price of Brent, which fell to nearly $92 a barrel on Tuesday, came close to $97 a barrel on Friday. The U.S. DOE report showed a 7.1 million-barrel decline in commercial and a 3.4 million-barrel decline in strategic crude inventories, or 1.2%, for a total of 10.5 million barrels.
The main factor was the increase in oil exports to a new record of 5.0 million barrels per day (mb/d). U.S. net oil imports fell to an all-time low of 1.1 mb/d as a result. U.S. oil production estimates also fell by 0.1 mbps to 12.1 mbps. However, fluctuations in export and import flows from week to week are temporary factors that cannot support the price of oil for long.
Oil and gas quotes – what’s happening in the market?
Demand for petroleum products in the U.S. is a much more important driver. U.S. gasoline shipments rose 2.5% over the previous week and 0.2% year-to-date to 9.35 mbps, also 3.1% above the four-week average. As a result, gasoline inventories fell by 4.6 million barrels, or 2.1%. Gasoline supplies provide an indication of the dynamics of demand. They have declined year-over-year for nine consecutive weeks, with a 13% drop twice in July. Therefore, even a slight increase in apparent demand is perceived by the market with optimism.
Oil prices strengthened as gas prices rose rapidly to new records: the monthly TTF contract closed Friday at about $2,600 per thousand cubic meters, adding 19% over the week.
In terms of energy units, gas is now more than four times more expensive than oil in Europe. This is why everywhere possible, gas is being replaced by oil products – particularly in the energy and petrochemical industries. The total volume of substitution is not great, but it is enough for gas prices to start “pulling up” oil prices.
This dependence will continue to affect the oil market in the coming weeks. That is why, he said, “we are not expecting a sharp drop in oil prices while gas in Europe is trading above $2,000 per thousand cubic meters. Analysts forecast that Brent will stay above $95 per barrel in the new week.
At the same time, the alarming dynamics of diseases and quarantines in China limit the potential for oil growth. The new outbreak in Hainan province is likely to be localized, but the experience of the last months suggests a high probability of new outbreaks. Therefore, the forecast is a $95-100 range for Brent over the coming week.
Earlier we reported that a fall in Brazil’s harvest will trigger a rise in black coffee prices.
Investing.com– Gold prices fell slightly in Asian trade on Tuesday but remained close to recent peaks as traders awaited key U.S. inflation data for more cues on the Federal Reserve’s plans to begin cutting interest rates.
The yellow metal benefited from safe haven buying following a severe risk-off move across markets last week, which was triggered by concerns over slowing economic growth.
Spot prices came within spitting distance of a record high on Friday, but then pulled back as the advanced ahead of this week’s inflation reading.
fell 0.1% to $2,502.07 an ounce, while expiring in December fell 0.1% to $2,531.0 an ounce by 00:22 ET (04:22 GMT).
Gold steady with Inflation, Fed meeting in sight
Focus this week is squarely on inflation data, due on Wednesday, for more cues on the U.S. economy.
Any signs of cooling inflation are likely to spur increased bets on lower interest rates in the coming months- a scenario that bodes well for gold.
Wednesday’s inflation reading comes just a week before a , where the central bank is widely expected to cut interest rates by 25 basis points.
Expectations of the September cut were also a key driver of gold’s recent gains, given that the cut is likely to kick off an easing cycle by the Fed.
Lower rates bode well for gold, given that they reduce the opportunity cost of investing in the yellow metal.
Other precious metals fell on Tuesday, having largely lagged gold in recent weeks. fell 0.1% to $945.0 an ounce, while fell 0.2% to $28.590 an ounce.
Copper edges lower, Chinese trade data brings little cheer
Among industrial metals, prices retreated on Tuesday, taking little support from data that showed some economic resilience in top importer China.
China’s unexpectedly grew in August on strength in the country’s . But laggard offset cheer over this trend, given that they signaled sluggish demand in the country.
China’s overall copper imports shrank 12.3% year-on-year in August, although they were still in positive territory for the first eight months of the year.
The soft import data came following a string of weak readings on China’s economy over the past week, which raised concerns over slowing growth in the world’s biggest copper importer.
The data, coupled with a broader risk-off move in global markets, saw copper nursing steep losses over the past week.
Investing.com– Oil prices steadied in Asian trade on Tuesday as traders sought to gauge the impact of Tropical Storm Francine on U.S. oil production, while concerns over sluggish demand remained in play.
Prices were nursing steep losses from the prior week amid renewed concerns that global oil demand will slow, especially following middling economic readings from top importer China. The prospect of oversupply and increased production also weighed.
But oil prices rebounded on Monday as sentiment improved.
expiring in November were flat at $71.86 a barrel, while steadied at $67.90 a barrel by 22:37ET (02:37 GMT).
Tropical storm Francine set to batter Gulf of Mexico
A slew of oil companies were seen stopping production and refining activities in the Gulf of Mexico as Tropical Storm Francine made its way towards the U.S. mid-South.
The storm is expected to potentially strengthen into a hurricane before making landfall, and is expected to lash the upper Texas and Louisiana coasts with heavy rain and gale winds this week.
The storm could potentially cause extended disruptions in the energy-rich Gulf of Mexico, reducing crude supplies in North America and presenting a tighter near-term outlook for oil markets.
This notion offered oil markets some support, helping them recover a measure of bruising losses logged last week.
Oil battered by demand concerns, China woes
Oil prices were nursing steep losses in recent sessions as markets fretted over slowing demand, especially in top crude importer China.
A string of weak economic readings from the country for August drummed up concerns over slowing growth, as did signs that increasing electric vehicle adoption was also denting fuel demand.
Beyond China, caution over U.S. interest rates also weighed on oil markets, especially ahead of key inflation data due later this week.
The inflation reading comes just a week before a Federal Reserve meeting, where the central bank is widely expected to cut interest rates by 25 basis points.
By Ahmad Ghaddar
LONDON (Reuters) -Oil prices gave up the previous day’s gains on Tuesday as a weaker demand outlook offset U.S. supply disruptions from Tropical Storm Francine and global oil oversupply risks that continue to weigh on the market.
futures were down 95 cents, or 1.3%, at $70.89 a barrel by 1214 GMT. U.S. West Texas Intermediate crude lost 96 cents, or 1.4%, to $67.75.
Both benchmarks had risen about 1% on Monday.
The Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report on Tuesday that global oil demand will rise by 2.03 million barrels per day (bpd) in 2024, down from previously projected growth of 2.11 million bpd.
OPEC also cut its 2025 global demand growth estimate to 1.74 million bpd from 1.78 million bpd.
The weakening global demand prospects and expectations of oil oversupply kept the market suppressed.
Chinese data on Monday showed consumer inflation accelerated in August to its fastest in half a year, though domestic demand remained fragile, and producer price deflation worsened.
And while data released on Tuesday showed China’s exports grew at their fastest in nearly 1-1/2 years in August, imports disappointed against a backdrop of depressed domestic demand.
“The message from China is simple but loud and reverberates throughout the globe,” said PVM Oil analyst Tamas Varga, adding that the country is struggling to encourage spending and boost sluggish demand.
Meanwhile, the U.S. Coast Guard ordered the closure of all operations at Brownsville and other small Texas ports on Monday evening as Tropical Storm Francine barrelled across the Gulf of Mexico. Corpus Christi port remained open with restrictions.
The tropical storm is forecast to strengthen significantly and become a hurricane on Tuesday, according to the National Hurricane Center (NHC).
Exxon Mobil (NYSE:) said it shut in output at its Hoover offshore production platform while Shell (LON:) paused drilling operations at two platforms. Chevron (NYSE:) also began shutting in oil and gas output at two of its offshore platforms.
The U.S. Energy Information Administration is due to publish its short-term energy outlook, with forecasts for the global market and oil output.
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