Oil ends lower as traders weigh supply disruptions and omicron’s threat to energy demand

- Advertisement -


Oil futures fell lower on Monday, as traders weighed supply disruptions in Kazakhstan and Libya against the threat of energy demand posed by the Omicron version of the coronavirus.

- Advertisement -

“Oil on Monday did much better than other riskier assets on Monday as supply concerns persisted after the last week’s price hikes overseas and a pipeline outage,” Tyler Ritchie, co-editor of Sevens Report Research, told Businesshala.

- Advertisement -

“As far as geopolitical tensions are concerned, various conflicts and threats in Eastern Europe and the Middle East will continue to be helpful for energy in the near term,” he said. However, “it already appears that some disruptions in supply and production are being resolved, which could lead to a ‘sell the news’ reaction from the markets in the coming sessions, pending any new development.”

Oil supplies were hit last week by protests in Kazakhstan, while pipeline maintenance in Libya saw oil production plummet, weeks after militias closed major oil fields.

- Advertisement -

About 300,000 barrels of oil per day remained closed as Libya’s major western oilfields were halted. Sources told S&P Global Platts On Monday, but after pipeline maintenance was completed at the eastern Waha oil fields, the country’s output reached nearly 900,000 barrels per day.

At Sevens Report Research, Ritchie said he expects US benchmark oil prices to see some consolidation back toward $75 a barrel “as recent gains are digested,” although a deeper correction “is possible if fundamental.” The outlook continues to deteriorate.”

West Texas Intermediate Crude for February Delivery CL00,
-0.99%

clg22,
-0.99%
The New York Mercantile Exchange fell 67 cents, or about 0.9%, to $78.23 a barrel after recording losses on Friday. March Brent Crude BRN00,
-0.19%

BRNH22,
-0.19%,
The global benchmark fell 88 cents, or 1.1%, to $80.87 a barrel on ICE Futures Europe. Last week, the US benchmark, WTI, rose 4.9%, while Brent advanced over 5%.

Concerns about the impact of COVID on demand continued to put pressure on oil. Chinese authorities in the northern coastal city of Tianjin detected two cases of COVID-19, caused by the Omicron version of the coronavirus, Ordered testing of lakhs of people A few weeks before the start of the Winter Olympics in nearby Beijing. China is sticking to a “zero-COVID policy”, which includes strict lockdowns and mass testing in response to outbreaks.

Failed China ‘zero-Covid’ policy 2022 tops list of geopolitical risks: Eurasia Group

Warren Patterson, Head of Commodity Strategy at ING, said in a note, “While we get used to other countries living with COVID, China is clearly continuing its zero-COVID policy.” keeps.” “This is a risk to oil demand as China is the world’s largest importer of crude. We are also approaching Chinese New Year, a time when there is usually a lot of domestic travel, and therefore any domestic restrictions will impact oil consumption.

But supply concerns could remain a big factor, he said, given the unrest in Kazakhstan and production slack in Libya.

Chevron said the Tengizchevroil consortium led by it is gradually restoring production at Kazakhstan’s Tengiz oil field after civil unrest reduced production by an unspecified amount last week, according to news reports,

Rohan Reddy, analyst at global exchange-traded fund provider Global X, said the country produces about 2.1% of global oil production and any impact on production could be short-lived. Even if there are long-term effects, other countries, such as the US, can “step up to fill the void left by lost Kazakh production.”

Meanwhile, US and Russian negotiators held talks in Geneva on Monday amid Moscow’s military build-up near Ukraine, but Deputy US Secretary of State Wendy Sherman referred to the incident as a “discussion”, not “what you negotiate”. They say”. According to the Wall Street Journal, More meetings are expected in Brussels and Vienna later this week.

In other Nymex deals, the February Gasoline RBG22,
-1.08%
shed 1% to $2.275 per gallon, while February heating oil HOG22,
+0.21%
Bargained 0.2% to $2.488 per gallon.

February Natural Gas NGG22,
+6.08%
Closed at $4.079 per million British thermal unit, up 4.2%.

In a Monday note, Kristin Redmond, commodity analyst at Schneider Electric, said cold weather forecasts raised expectations for warmer demand through mid- to late-January.

,

- Advertisement -

Stay on top - Get the daily news in your inbox

DMCA / Correction Notice

Recent Articles

Related Stories

Stay on top - Get the daily news in your inbox