Image: Reuters Berita 24 English - Tuesday saw minimal movement in Brent oil prices , retracing $1 in previous gains, as investors weighed s...
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| Image: Reuters |
Berita 24 English - Tuesday saw minimal movement in Brent oil prices, retracing $1 in previous gains, as investors weighed supply concerns, highlighted by a prospective Norwegian output cut, and concerns about a future global recession potentially reducing gasoline consumption.
By 0432 GMT, the September settlement of Brent crude futures had risen 0.2 percent, or 22 cents, to $113.73 a barrel.
U.S. West Texas Intermediate crude increased $1.95, or 1.8 percent, from Friday's finish to $110.38 per barrel. Due to the United States' Independence Day holiday, there was no WTI settlement on Monday.
According to Warren Patterson, head of ING's commodity strategy, "demand concerns exist given the more gloomy economic picture, but the market is still projected to be tight for the balance of the year."
Norwegian offshore workers started a walkout on Tuesday that will lower the amount of oil and gas produced, the union in charge of the industrial action told Reuters.
According to Norwegian producer Equinor, the strike is anticipated to reduce oil and gas production by 89,000 barrels of oil equivalent per day (boepd), of which gas production accounts for 27,500 boepd.
The nation's oil and gas association said on Sunday that starting on Wednesday, oil production will be reduced by up to 130,000 barrels per day. 6.5 percent of Norway's production would be represented by that, according to a calculation by Reuters.
Prices on Tuesday received some support from data indicating increased activity in the service sectors of the economies of China and Japan, two of the largest oil importers in the world.
The final au Jibun Bank Japan PMI last month revealed the fastest rate of expansion since October 2013, while China's Caixin services purchasing managers' index (PMI) ended three months of decline and increased at the fastest rate in over a year.
However, as global financial conditions tighten broadly and the U.S. Federal Reserve fights high inflation with swift interest rate rises, investors are growing more anxious about demand.
As governments attempt to control inflation, interest rates are also expected to rise in Australia and South Korea. Inflation in South Korea reached a nearly 24-year high in June, adding to worries about slowing economic growth and falling oil demand.
In a commentary, Stephen Innes of SPI Asset Management said that "oil is still fighting to emerge from its present recessionary doldrums as the market pivots away from inflation to economic pessimism."
