Oil slips as traders mull surprise increase in US stocks
‘Demand growth is starting to moderate and the picture for the latter half of the year is looking increasingly bleak,’ says Vanda Insights
14 April 2022 - 07:42
byMohi Narayan
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
New Delhi — Oil prices fell on Thursday, after rising sharply in the first half of the week, as traders weighed a larger-than-expected build in US oil stocks against tightening global supply.
Brent futures were down 45c, or 0.4%, at $108.33 a barrel, while US West Texas Intermediate futures were off 69c, or 0.7%, at $103.56 a barrel at 3.54am GMT.
Both contracts on Wednesday had shrugged off a large build in US crude inventories to end the trading session about 4% higher.
“Demand growth is starting to moderate and the picture for the latter half of the year is looking increasingly bleak,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
However, the oil complex is heavily focused on the short term and fears of supply shortages are crowding out that view, she said.
The International Energy Agency (IEA) on Wednesday warned that from May onwards about 3-million barrels a day of Russian oil could be shut-in due to sanctions or voluntary embargoes.
The probability of a EU ban on Russian oil being agreed may be almost zero, but no-one will be able or wanting to say that clearly, Hari said.
“And, even a continuing sabre-rattling will be enough to keep the risk premium alive.”
At the same time, major global trading houses are also planning to curtail crude and fuel purchases from Russia's state-controlled oil companies in May, Reuters reported on Wednesday.
Despite signals that global supply disruption will persist, oil stocks in the US rose by more than 9-million barrels last week, the US Energy Information Administration said on Wednesday, driven in part by releases from the nation's strategic reserves. Analysts in a Reuters poll had anticipated just an 863,000-barrel build.
US petrol stocks fell 3.6-million barrels last week, far above expected levels, and distillate inventories also declined.
“Oil prices are looking very comfortable above the $100 level as US and Chinese demand seems to be heading in the right direction,” wrote Edward Moya, a senior analyst with Oanda.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil slips as traders mull surprise increase in US stocks
‘Demand growth is starting to moderate and the picture for the latter half of the year is looking increasingly bleak,’ says Vanda Insights
New Delhi — Oil prices fell on Thursday, after rising sharply in the first half of the week, as traders weighed a larger-than-expected build in US oil stocks against tightening global supply.
Brent futures were down 45c, or 0.4%, at $108.33 a barrel, while US West Texas Intermediate futures were off 69c, or 0.7%, at $103.56 a barrel at 3.54am GMT.
Both contracts on Wednesday had shrugged off a large build in US crude inventories to end the trading session about 4% higher.
“Demand growth is starting to moderate and the picture for the latter half of the year is looking increasingly bleak,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
However, the oil complex is heavily focused on the short term and fears of supply shortages are crowding out that view, she said.
The International Energy Agency (IEA) on Wednesday warned that from May onwards about 3-million barrels a day of Russian oil could be shut-in due to sanctions or voluntary embargoes.
The probability of a EU ban on Russian oil being agreed may be almost zero, but no-one will be able or wanting to say that clearly, Hari said.
“And, even a continuing sabre-rattling will be enough to keep the risk premium alive.”
At the same time, major global trading houses are also planning to curtail crude and fuel purchases from Russia's state-controlled oil companies in May, Reuters reported on Wednesday.
Despite signals that global supply disruption will persist, oil stocks in the US rose by more than 9-million barrels last week, the US Energy Information Administration said on Wednesday, driven in part by releases from the nation's strategic reserves. Analysts in a Reuters poll had anticipated just an 863,000-barrel build.
US petrol stocks fell 3.6-million barrels last week, far above expected levels, and distillate inventories also declined.
“Oil prices are looking very comfortable above the $100 level as US and Chinese demand seems to be heading in the right direction,” wrote Edward Moya, a senior analyst with Oanda.
Reuters
JSE could benefit from recovering Asian markets on Thursday
Market data — April 13 2022
WATCH: Market Report
MARKET WRAP: Surging crude prices dent JSE
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
Asian shares follow Wall Street higher
Global stocks little changed amid mixed inflation signs
Oil prices rise as Russia bemoans failed peace talks with Ukraine
Gold edges higher as Ukraine war boosts its safe-haven status
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.