October 5, 2022

Oil drops amid economic recession fears.  Supply fears cap declines

Oil drops amid economic recession fears. Supply fears cap declines

Crude oil storage tanks are seen in an aerial view of the Cushing Oil Center in Cushing, Oklahoma, US, April 21, 2020. Reuters/UAV Base

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SINGAPORE (Reuters) – Oil prices fell on Monday as fears of a global recession sparked fears of slowing fuel demand growth, although supply concerns before the European Union’s ban on Russian oil in December limited declines.

Brent crude futures for November were down 46 cents, or 0.5 percent, at $90.89 a barrel by 0701 GMT.

US West Texas Intermediate (WTI) crude futures for October delivery were at $84.46 a barrel, down 65 cents, or 0.8%. The October WTI contract expires on Tuesday and the most active November contract is at $84.12, down 64 cents.

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Both contracts jumped more than $1 earlier on Monday. Last week, oil futures fell more than 1% on concerns that another rate hike by the Federal Reserve could slow global growth.

The dollar took a bullish turn on Monday as investors braced for a busy week of central bank meetings that are sure to see borrowing costs rise worldwide, with some risks of a massive rally in the US. A strong US dollar makes dollar-denominated commodities more expensive for holders of other currencies. Read more

Despite fears of declining fuel demand, persistent supply concerns limited the price decline.

“The market still has European sanctions on Russian oil hanging on it. With supply disruptions in early December, the market is unlikely to see any quick response from US producers,” ANZ analysts said on Monday.

Analysts said the easing of COVID-19 restrictions in China may give some optimism.

China has begun easing COVID restrictions in the southwestern city of Chengdu of more than 21 million people, helping to allay concerns about demand in the world’s second-largest energy consumer. China’s exports of gasoline and diesel also rebounded, blunting rising domestic stocks, after Beijing issued new quotas. Read more

Meanwhile, the CEO of Kuwait Petroleum Corporation (KPC) said on Sunday that its customers are still ordering the same quantities unchanged. He said that the Gulf state currently produces more than 2.8 million barrels per day of oil, according to the quota of OPEC. Read more

The Basra Oil Company said that the loading and export of oil from the Basra Oil Terminal returned to its normal levels on Saturday, a day after it was halted due to the spill that has now been contained. Read more

In Nigeria, Shell’s 200,000 barrel per day deep-water storage and offloading vessel Bonga is scheduled for maintenance in October, a company spokesperson said on Sunday.

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(Reporting by Florence Tan and Ghislaine Lehr); Editing by Lincoln Fest, Shri Navaratnam and Christian Schmolinger

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