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Oil prices headed lower on Monday, after posting back-to-back session gains, as the Organization of the Petroleum Exporting Countries said in a monthly report that uncertainties surround the outlook for global crude supplies, and also slightly reduced its forecast for oil demand.

The move for oil marks a shift from early Monday gains on the back of reports that Beijing could further ease “COVID zero” policy despite ongoing lockdowns in some cities.

Price action
  • West Texas Intermediate crude for December delivery


    lost $1.22, or 1.4%, to trade at $87.74 a barrel on the New York Mercantile Exchange after trading as high as $89.57 early in the session. The front-month contract had posted gains in each of the past two sessions, but still marked a decline of 3.9% last week, according to Dow Jones Market Data.

  • January Brent crude


    fell 87 cents, or 0.9%, to $95.12 a barrel on ICE Futures Europe following a 2.6% loss last week.

  • December gasoline

    declined by 1.1% to $2.5819 a gallon, while December heating oil

    traded at $3.6187 a gallon, up 1.8%.

  • December natural gas


    tacked on 7.7% to $6.332 per million British thermal units, after losing 5.8% on Friday.

Market drivers

In its closely followed monthly market report, OPEC modestly revised lower its forecast for global oil demand while making small tweaks to its supply forecasts and holding off from making changes to its global economic growth forecasts.

Read The Wall Street Journal: Oil Market Faces ‘Considerable Uncertainties,’ OPEC Warns

OPEC lowered its global oil demand growth forecast for 2022 by 100,000 barrels a day to 2.5 million barrels a day.

That’s “in large part due to China’s anti-COVID measures — a move which markets will likely interpret as a pretext for further demand cuts by the group,” said Harry Altham, energy analyst, EMEA & Asia for StoneX Group, in Monday’s market commentary.

On Monday, however, reports said some Chinese cities have started to reduce routine commodity COVID-19 testing.

“China is to reduce its mass testing requirements, release people from quarantine camps and further reduce restrictions on entry requirements for foreigners,” said Altham, adding that general optimism has boosted the Hang Seng Index by 20% over the last two weeks.

Still, “it remains the case that full economic reopening appears to be some way off,” he said.

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