Record US unemployment numbers weigh on Brent

Front-month ICE Brent has declined by $1.46/bbl on the day from Friday, to $80.40/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

The EU's embargo on refined Russian oil products came into effect yesterday. The G7 coalition - which includes the EU and Australia - has set two price caps on Russian refined products. A price cap of $100/bbl will be imposed on products traded at a premium to crude. A cap of $45/bbl will be imposed on refined products traded at a discount to crude.

Russian presidential spokesman Dmitry Peskov has warned that the EU embargo will lead to “market imbalances," state news agency TASS reports.

A supply shortage could eventually ensue, Goldman Sachs' global head of commodities research Jeff Currie warned in an interview with Bloomberg. "Right now, we're still balanced to a surplus because China has still yet to fully rebound...Are we going to run out of spare production capacity? Potentially by 2024, you start to have a serious problem.”

Downward pressure:

China's oil demand is still uncertain, Vandana Hari of Vanda Insights has told CNBC. "The initial boost in Chinese demand is obvious...But when does the Chinese economy actually pick up momentum again? I think that’s a big question.”

The US unemployment rate has dropped to a record 53-year low, official data has shown. Low unemployment will negatively impact Brent as “Prospects of less aggressive [interest] rate hikes were dashed by the record low unemployment numbers,” ANZ commodity strategist Daniel Hynes commented.

By Konica Bhatt

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