Oil slumps US$3/bbl on petrol stockpiles, rate hikes and resuming supply
OIL prices fell more than US$3 a barrel on Thursday on higher US petrol stockpiles and after a European Central Bank (ECB) rate hike stoked demand worries, while returning oil supply from Libya and the resumption of Russia’s gas flows to Europe eased supply restraints.
Brent crude futures settled at US$103.86 a barrel, falling US$3.06, or 2.9 per cent.
US West Texas Intermediate crude settled at US$96.35 a barrel, declining US$3.53, or 3.5 per cent. Both were down more than US$5 earlier in the session.
US petrol futures settled at US$3.15, losing 13 cents, or 3.8 per cent following a jump of 3.5 million barrels of the commodity in storage last week, US government data showed on Wednesday, far exceeding analyst forecasts.
“If you don’t need the gasoline, then you don’t need the crude oil to make the gasoline, and that’s the math that’s killing crude oil right now,” said Robert Yawger, executive director of energy futures at Mizuho.
Oil futures trading volumes have also been thin and prices volatile as traders attempt to square weaker energy demand with tighter supply resulting from the loss of Russian barrels after the country’s invasion of Ukraine.
Flows through Russia’s Nord Stream 1 natural gas pipeline, which runs under the Baltic Sea to Germany, partially resumed after being shut for maintenance on July 11.
The pipeline had already run on reduced volumes following a dispute sparked by Russia’s invasion of Ukraine.
“The resumption of Nord Stream gas flows appears to be conjuring up images of a more conciliatory posture on the part of Russia regarding continued movement of crude and products into Europe in the coming weeks/month,” said Jim Ritterbusch of Ritterbusch and Associates in a note.
The European Central Bank on Thursday joined many other central banks in raising interest rates, focusing on fighting runaway inflation rather than the economic downturn, which can weigh on oil demand.
The Bank of Japan maintained ultra-low interest rates to stimulate stalling economic growth.
On Wednesday, Libya’s National Oil Corp (NOC) said crude production had resumed at several oilfields after the lifting of force majeure on oil exports last week.
The reduced flow on one of Canada’s major oil export arteries, the Keystone pipeline, should only have a slight impact on oil deliveries, analysts said. REUTERS
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