Image: Reuters Berita 24 English - As the market countered supply concerns with forecasts that a rise in U.S. interest rates would dampen ga...
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| Image: Reuters |
Berita 24 English - As the market countered supply concerns with forecasts that a rise in U.S. interest rates would dampen gasoline consumption, oil prices remained largely stable on Monday.
By 0909 GMT, September-settled Brent crude futures were up 27 cents, or 0.26 percent, to $103.47 per barrel, while September-set WTI crude futures were up 8 cents, or 0.08 percent, to $94.78 per barrel.
As traders attempted to balance the likelihood of further interest rate increases, which could restrict economic activity and thereby slow the growth in fuel demand, with the tight supply resulting from disruptions in the trading of Russian barrels due to Western sanctions during the Ukraine conflict, oil futures have been volatile in recent weeks.
According to Jeffrey Halley, a senior market analyst at OANDA, "rising recession fears internationally do signal that gains are likely to be limited in the shorter term, geopolitics aside."
At its meeting on July 26–27, the Federal Reserve is expected to likely increase interest rates by 75 basis points.
Due to COVID-19 lockdowns, a sluggish real estate market, and cautious consumer attitude, China, the second-largest economy in the world, just avoided experiencing a decline in the second quarter, expanding just 0.4 percent year over year.
However, considerable backwardation in inter-month spreads still indicates a shortage of supplies in the near future. Prices in the front month are greater than prices in the following months in a backwardated market.
When expiry-related surges in the two prior months are taken into account, the spread reached an all-time high on Friday of $4.82/bbl.
The National Oil Corporation (NOC) of Libya stated in a statement early on Saturday that it wants to increase production from about 860,000 barrels per day (bpd) to 1.2 million bpd in two weeks.
Analysts, however, predict that because tensions are still high, Libya's output will remain unstable.
According to Warren Patterson, head of commodities strategy at ING, "expectations that Russian oil supply will trend lower in the months ahead as widely-expected plans for a price restriction on Russian oil may have the opposite effect on oil prices than hoped for," which also follow continued tight supply.
In accordance with a modification of sanctions adopted by member states last week with the goal of reducing the threats to global energy security, the European Union said last week that it would permit Russian state-owned firms to ship oil to other nations.
Elvira Nabiullina, the governor of the Russian Central Bank, stated on Friday that Russia would not provide oil to nations that choose to set a price restriction on its oil.
