This week, international oil prices hit a new low since mid-April as investors became increasingly concerned about the prospect of a global economic recession, curbing fuel demand. However, investors were also worried about tight supply caused by OPEC production cuts, geopolitica

This week, international oil prices hit a new low since mid-April as investors became more concerned about the prospect of a global economic recession, curbing fuel demand. However, investors were also worried about supply constraints caused by OPEC production cuts, geopolitical turmoil, strikes and other factors, which in turn restricted supply. of oil price declines.

As of press time, NYMEX crude oil futures fell 4.68% to US$103.32/barrel; ICE Brent crude oil futures fell 5.48% to US$105.29/barrel. However, the two markets hit a new low of $95.10/barrel since April 12 and a new low of $98.50/barrel since April 11 respectively.

Economic recession prospects + global central banks raise interest rates, curbing demand for goods

Concerns about economic recession continue to weigh on the market. Some early assessments suggest the U.S. economy may continue to shrink in the second quarter. A second consecutive quarter of economic contraction would be considered a technical recession. Meanwhile, more major central banks raised interest rates in June than in any month in at least the past 20 years, and with inflation at a multi-decade high, monetary policy tightening is unlikely to stop this year.

Two hawkish officials from the Federal Reserve said on Thursday (July 7) that they support another 75 basis point interest rate hike later this month, but later slowed the pace of policy tightening, although both played down rising borrowing costs. Putting the United States at risk of economic recession.

The U.S. non-farm payroll data in June was significantly better than expected, supporting the Federal Reserve to continue to raise interest rates by 75 basis points in July. The vigorous tightening of monetary policies by central banks around the world, including the Federal Reserve, will suppress market demand and thus put downward pressure on commodity prices.

CMC Markets analyst Tina Teng said in a report: "Selling pressure in commodity markets eased as traders shook off worries about an economic recession and turned their attention to supply shortages. However, economic uncertainty remains, and benchmarks Inversion in bond yields signals an inevitable recession, which may continue to weigh on commodity prices.

OPEC may cut output

Libya's national oil company said last week Libyan exports had fallen to 365,000 barrels to 409,000 barrels. barrels per day, a decrease of approximately 865,000 barrels per day from normal levels. A survey shows that the 10 members of the Organization of the Petroleum Exporting Countries (OPEC) reduced production by 100,000 barrels per day in June to 28.52 million barrels per day, failing to achieve their promised increase of approximately 275,000 barrels per day. Warren Patterson, head of commodity research at

ING, said: "Oil fundamentals remain strong, and the strong backwardation structure still indicates a tight market. OPEC's production fell in June, and it is clear that the group still faces difficulties in achieving the agreed output levels."

ANZ research analysts said in a report that production cuts in in Nigeria and Libya are offset by and other large oil producers, and that Libya faces further supply disruptions due to escalating political unrest, which makes OPEC It is even less likely to realize its new quota capacity.

The Norwegian government intervened in the strike

Local union leaders and the Labor Ministry said that the Norwegian government intervened on Tuesday (July 5) to end the strike of workers in the oil and gas industry. Unions have threatened to cut the country's natural gas exports by nearly 60% and exacerbate supply shortages linked to the war in Ukraine.

Norway is Europe's second largest energy supplier after Russia and has high demand for oil and gas as the country is seen as a reliable and predictable supplier, especially as Russia's Nord Stream 1 gas pipeline will Closed on July 11 for 10 days of maintenance.

ING head of commodity strategy Warren Patterson wrote in a report: "Despite the bleak macro outlook and demand concerns, the market is expected to remain tight for the rest of the year."

Russia proactively limits output

There are reports that Japan proposes Limit Russian oil prices to about half of current levels. In response, former Russian President Medvedev warned that this move would lead to a significant reduction in oil supply on the market and push prices to more than $300 or even $400 per barrel.

Traders are eyeing possible oil supply disruptions from the Caspian Pipeline Consortium (CPC). A Russian court has issued a ruling requiring the alliance to suspend operations for 30 days. Western sanctions on Russia have led to a decline in the latter's oil exports and pushed up oil prices. But the United States says Kazakhstan oil exports through Russia should not be interrupted.

Pavel Zavalny, chairman of the energy committee of the lower house of the Russian parliament, said on Thursday (July 7) that Moscow will take control of the neighboring Sakhalin-2 project, a partnership involving Exxon Mobil (XOM.N), Japan's SODECO and India's ONGCVidesh, a week after taking over Sakhalin-1 oil and gas project. Stephen Innes, managing director of

SPIAsset Management, said: "With more interest rate hikes and the U.S. economy potentially falling into a technical recession, bullish ambitions may be very limited. The only reason why oil prices have not started a decline is that Russia has actively and passively restricted oil output."

United States Crude oil inventories surge

The U.S. Energy Information Administration (EIA) said on Thursday that U.S. crude oil inventories unexpectedly increased by 8.235 million barrels in the week ended July 1, while analysts expected a decrease of 1.55 million barrels. Most of the increase in inventories is due to the release of the U.S. Strategic Petroleum Reserve (SPR), with the latest release reaching 5.8 million barrels.

But the EIA said U.S. commercial crude oil inventories were at 423.8 million barrels, about 10% below the previous average for this time of year. Both gasoline and distillate stocks fell as refiners tried to meet consumer demand. Refined oil supply, the best proxy for U.S. consumer demand, rose to 20.5 million barrels per day in the latest week.

Andrew Lipow, president of Lipow Oil Associates in Houston, said: "Inventories are supportive of the oil market as the SPR offsets the increase in commercial inventories, so overall inventories are lower."

PriceFutures analyst Phil Flynn said the group: "We know that refineries are going to have to continue to run at high speed to To keep up with demand, crude inventories are not expected to rise significantly next week."

Consulting firm FGE still expects demand to grow by about 2 million barrels per day by the end of 2023. Fereidun Fesharaki, an analyst at the agency, said: "If the forecast recession is not severe, crude oil prices should remain near US$100/barrel in the next 2-3 years."

This article comes from Huitong.com