Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Crude Oil Surges Higher; Supply Outages Boost Market

Published 01/07/2022, 14:34
Updated 01/07/2022, 14:34
© Reuters.

© Reuters.

By Peter Nurse   

Investing.com -- Oil prices climbed Thursday, ending a gloomy week on a positive note as expectations of further supply tightness outweighed worries about a global economic slowdown.

By 9:20 AM ET (1320 GMT), U.S. crude futures traded 2.5% higher at $105.36 a barrel, while the Brent contract rose 2.4% to $111.64 a barrel.

U.S. Gasoline RBOB Futures were up 3.4% at $3.6565 a gallon.

Libya's National Oil Corporation declared force majeure on Thursday at the Es Sider and Ras Lanuf ports as well as the El Feel oilfield, adding to the force majeure already in effect at the ports of Brega and Zueitina.

This has resulted in production dropping sharply, with daily exports ranging between 365,000 and 409,000 barrels a day, a decrease of 865,000 barrels a day compared with production in "normal circumstances", NOC said.

Adding to this, a number of Norwegian offshore oil workers have elected to go on strike from July 5, likely halting about 4% of Norway's oil production.

At the same time, the chances of reviving the 2015 Iran nuclear deal appear to be small after indirect U.S.-Iranian talks in Doha that ended without progress, limiting the chances of Iranian oil returning to the global market any time soon.

That said, both benchmark contracts have seen selling for much of this week, ending the month on Thursday lower for the first time since November, amid concerns aggressive monetary tightening will limit economic activity, leading to crude demand destruction.

“There is a very real risk that we see a further deterioration in spending over the second half of the year,” said analysts at ING, in a note. “So for oil, it is clear that macro developments are still the key driver for price direction at the moment.” 

The Organization of the Petroleum Exporting Countries and their allies including Russia, known as OPEC+, confirmed on Thursday the previously announced plan for modest output increases in August.

“Yesterday’s OPEC+ meeting was a relatively boring affair,” ING added. “However, the next meeting, which is scheduled for 3 August could be more interesting, given that President Biden is set to visit the Middle East in July. He will likely put pressure on producers in the region to increase output more aggressively.”

Of interest later in the session will be the Baker Hughes’ rig count and the CFTC’s net positioning data.

Latest comments

hi sir pls hw to trade pls
thanx you sir
thanx you sir
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.