April 24, 2024

Oil extends losses as financial headwinds weigh on demand outlook

Oil costs fell for a second day on Monday as financial headwinds pressured the worldwide oil demand outlook and outweighed geopolitical considerations within the Center East and an assault on a Russian gas export terminal over the weekend.

Brent crude fell 41 cents, or 0.5%, to $78.15 a barrel by 0105 GMT after settling down 54 cents on Friday.

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The front-month U.S. West Texas Intermediate crude futures, for February supply, inched down 2 cents to $73.39 a barrel with the contract set to run out afterward Monday. The extra lively March WTI contract was at $72.95 a barrel, down 30 cents.

“This morning’s subdued re-open speaks volumes about present sentiment within the crude oil market regardless of ongoing geopolitical tensions in Europe and the Center East,” IG analyst Tony Sycamore mentioned.

Costs barely budged regardless of an alleged Ukrainian drone assault at an enormous Russian gas export terminal. Russian producer Novatek mentioned on Sunday it had been pressured to droop some operations on the Baltic Sea terminal due to a hearth.

Within the Center East, the Gaza struggle rages on whereas the U.S. struck one other anti-ship missile making ready to launch into the Gulf of Aden by Yemen’s Houthi militants on Saturday.

The assaults by the Iran-aligned group within the Pink Sea and the Gulf of Aden have disrupted international commerce. It has additionally tightened European and African crude markets and pushed the premium of the first-month Brent contract to the six-month contract to $1.99 on Friday, the widest since November. This construction, referred to as backwardation, signifies a notion of tighter provide for immediate supply.

IG’s Sycamore mentioned oil fundamentals stay a headwind for costs.

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Oil “manufacturing is increased and the expansion outlook in China and Europe is blended at finest, whereas GDP knowledge this week is anticipated to indicate the rate of the U.S. financial system has slowed significantly,” he added.

The newest demand development forecasts by the U.S. Power Data Administration, the Worldwide Power Company and the Group of the Petroleum Exporting International locations for 2024 are in a variety between 1.24 million and a pair of.25 million barrels per day though all of the three organizations anticipate demand to decelerate in 2025.

The variety of oil rigs working within the U.S. fell by two to 497 final week, their lowest since mid November, Baker Hughes knowledge confirmed on Friday.

“We assume that these losses had been the rigs that weren’t in a position to safely re-activate attributable to chilly climate circumstances,” JP Morgan analysts mentioned in a observe.