Oil Prices Rise
Oil prices increased on Tuesday as concerns over a future recession and new Covid-19 limitations in China outweighed concerns about constrained global supply.
Brent crude futures jumped $1.09, or 0.9 percent, to $123.36 per barrel; meanwhile, WTI crude in the United States rose 96 cents, or 0.77 percent, to $121.89 per barrel.
A decline in Libyan exports has exacerbated tight supply due to a political conflict that has impacted output and ports.
Other OPEC+ countries fail to achieve their output requirements, and Russia is facing oil sanctions due to the Ukraine conflict. UBS increased its Brent price projection for the end of September to $130 per barrel and $125 for the next three quarters; up from $115. Fitch boosted its Brent and WTI pricing projections for 2022 by $5 each, to $105 and $100 per barrel, respectively.
Market Waits for The API Data
The market will be looking for weekly inventory data from the American Petroleum Institute on Tuesday; moreover, we’ll have the Energy Information Administration on Wednesday to see how tight crude and fuel supply remains. Six Reuters experts polled anticipate US crude stocks to have declined by 1.2 million barrels in the week ending June 3; gasoline stockpiles increased by approximately 800,000 barrels and distillate inventories remained steady. On the demand side, China’s current Covid outbreak, tied to a Beijing bar, has fueled fears of a fresh round of lockdowns just as the country’s restrictions loosened and fuel demand was supposed to rise.
On Monday, the Chinese capital’s most populated district, Chaoyang, began a three-day mass testing blitz among about 3.5 million people. According to OPEC delegates and industry sources, global oil demand growth should weaken next year, as rising oil prices contribute to inflation and drag on the global economy.
Oil prices may be under pressure if the Federal Reserve of the United States surprises markets with a higher-than-expected interest rate hike to combat inflation when it meets on June 14-15.
India’s Second-Largest Oil Supplier
According to the data given by these sources, the average daily rate of Russian oil exports to India was 819,000 barrels; up from a measly 277,000 barrels daily in April.
According to Finnish environmental agency research, Indian consumers now account for 18% of Russian crude oil shipments. What’s more fascinating is that part of the fuel from Indian refineries utilizes Russian crude; hence, some of it will finally end up in the United States. Since the outbreak of the Ukrainian conflict, Russian oil has traded at a substantial discount to Brent, hitting $30; this made it particularly appealing to massive importers like India and China.
Both countries have significantly increased their consumption of Russian oil in the last three months, with Kpler claiming that India has imported five times the quantity of Russian crude it purchased in 2021. Russian oil imports have totaled 60 million barrels since the beginning of 2022, compared to 12 million barrels for the entire year of 2021.
Despite US recommendations to cease buying so much Russian oil, the subcontinent is reportedly attempting to sign six-month supply contracts with Rosneft. India relies on imports to meet more than 80% of its crude oil needs; making it particularly sensitive to worldwide price increases.
A Significant Oil Market Risk
The economic hardship caused by still-high crude oil (and gas) prices for many countries may be worsened by another prolonged series of blockades of vital oil infrastructure in Libya. It follows the recent failure of Fathi Bashagha; named prime minister of the ‘alternative government’ in the country’s east three months ago, to seize power in Tripoli. Bashagha and the Nawasi Brigade militia he led were finally forced out of the city by the many factions battling.
Earlier this year, the Oil Ministry began discussing exploration and development options with several foreign oil companies; they reached a tentative agreement with TotalEnergies. However, at the heart of Libya’s short-, medium-and long-term crude oil production outlook, as reiterated behind the scenes in the recent Cairo talks by the US, is the need for genuine progress on the issue of fair distribution of oil revenues.
The post Oil Prices Rise appeared first on forexinsider24.com.
