Oil is down but risks of supply short are stronger

Brent 1st-nearby declined on Friday, by 1.6% to $106.65/b while the NYMEX WTI went 1.7% down to end the week at $102.07/b. Prices are further down this morning, the Brent now trading below $103/b, mainly due to renewed worries about the pandemic in China (see the Daily Eco).

Oil benchmarks have slipped by an average 5% over the past week as demand concerns grew, with the lockdowns in China, the reduction of economic growth forecasts (we learnt on Friday that the German government would revise its forecast of German economic growth from 3.6% to 2.2%) and Fed’s president comments about a 50bp rate hike in May that could not only weigh negatively on US growth, but also make the USD stronger making USD-quoted commodities prices lower.

Fears of supply shortage remain as the European Union could announce a ban on import of Russian oil:  in the wake of Germany, the Netherlands said on Friday the country will stop imports of Russian oil by the end of 2022.

US rig counts was up by 1 last week, according to Baker Hughes, reinforcing expectations that US oil output is going to increase at a slow pace.

Share this news :

You might also read :

ES-gas
March 11, 2021

Prices extended gains on lower temperatures

European gas prices extended gains yesterday, supported by the downward revision of temperatures. On the pipeline supply side, Norwegian flows were up yesterday, averaging 329…
ES-oil
November 22, 2021

Collapse at the prompt

The possibility of a coordinated SPR release is seriously denting the sentiment and upside risk in crude oil futures markets. Japan is now considering seriously an…
Join EnergyScan

Get more analysis and data with our Premium subscription

Ask for a free trial here

Don’t have an account yet? 

[booked-calendar]