Oil staggers as global economic worries offset tightening supply

Oil staggers as global economic worries offset tightening supply

Increased concerns regarding slowing economic growth and oil demand that redeem worries about tightening oil supplies have brought oil prices down on Monday.

Brent crude futures came down 8 cents or 0.1% to $113.04 per barrel by 0242 GMT after a rise of 1% earlier. Front-month prices also came down 7.3% last week, which is 1st weekly fall during the last five weeks.

U.S. West Texas Intermediate crude was trading at $109.49 per barrel, a fall of 7 cents, after an increase of more than $1. Front-month prices fell 9.2% last week, which is the first fall in the last eight weeks.

Warren Patterson-ING’s head of commodities research said it is clear now that macro factors are driving oil right now, rather than fundamentals.

The world’s second-largest exporter-Russia’s oil is still out of reach to most countries because of Western sanctions over the war in Ukraine.

The impact of the oil shortage has been reduced to some extent through releasing strategic petroleum reserves, led by the U.S, and increased oil production from the OPEC and its allies.

According to an analyst, if Washington remains on the same pace, by October U.S strategic reserves will be down to a 40-year low which is 358 million barrels. But, still the production of U.S oil and gas is increasing.

Baker Hughes Co-energy services firm issued a report on Friday that an early indicator of future output, oil and gas rig count has increased from seven to 740 in the week to June 17. This increase is said to be the highest since March 2020.

In Libya, due to blockades by groups in the east of the country, oil production remained volatile.

Mohamed Oun- Libyan Oil Minister told on Monday that Libya’s total oil production is near 700,000 barrels per day. On the other hand, a spokesperson for the oil ministry said last week that Libya’s oil production has decreased to 100,000 to 150,000 barrels per day.

China was once a major exporter of oil products but continues declining which also keeps global supplies tight.  

The export of China’s gasoline has fallen by 45.5% in May from last year and diesel exports fell 92.7% despite stalling domestic product, as companies ran short of export quotas.