Brent slips below $80/bbl first time since January
Front-month ICE Brent has retreated to pre-Ukraine war levels and slumped $3.47/bbl lower in just the past day, to $79.14/bbl at 09.00 GMT.
PHOTO: Getty Images
Upward pressure:
Going by an American Petroleum Institute (API) estimate, US commercial crude stocks declined by 6.4 million bbls in the latest week. Official Energy Information Administration (EIA) figures are due to come out at 15.30 GMT today.
Six analysts polled by Reuters estimate that US commercial crude stockpiles were drawn by about 3.8 million bbls in the week to 2 December.
The EIA sees Brent averaging $92/bbl next year as global oil inventories decline. It expects potential oil supply disruptions and slower fuel production growth to offset any downward pressure.
The EIA also estimates a drop in Russian oil production, to 9.49 million b/d in 2023, as various countries reduce their imports from Russia.
Covid-19 patients in China with mild symptoms will be quarantined at home, a significant shift in the Xi Jinping government's zero-tolerance policy. In addition, the Chinese National Health Commission has confirmed that most cases are asymptomatic and mild and do not require special treatment.
Downward pressure:
Persistent demand concerns in China, the world's largest crude importer, continue to ruffle oil markets.
The official Caixin Global survey shows that Chinese manufacturing has contracted for a fourth straight month, while service activity has plummeted to a six-month low. According to Caixin, "prolonged Covid-19 containment measures have battered consumer-related businesses and dampened confidence.”
Top bosses at global investment banks have reiterated their earlier warnings of a global recession in the run-up to 2023. Goldman Sachs chief executive David Solomon predicts that the US economy will enter a recession next year, with a 35% chance of a “soft landing.” JPMorgan’s head Jamie Dimon says the US economy will experience a "mild to hard recession" in 2023.
Earlier this week, Reuters reported the warning of EU Commissioner for Economy Paolo Gentiloni that, “we will have a recession this winter,” and that “growth will not return before spring.”
"It's been quite the three days - with OPEC+ deciding not to further cut production on Sunday, the toothless start of the Russian price cap and sanctions yesterday, and a rout in equity markets today, oil speculators are charging for the exits amid a flight from risk assets," Kpler’s lead oil analyst Matt Smith tells Reuters.
By Konica Bhatt
Please get in touch with comments or additional info to news@engine.online
