Mayra P. Saefong, Williams Watt, MarketWatch
SAN FRANCISCO/NEW YORK
EnergiesNet.com 06 24 2022
Oil futures extended their losses into a second session on Thursday, with U.S. prices booking their lowest finish in more than six weeks as recession worries rise.
Price action
- West Texas Intermediate crude for August delivery CL.1, 1.20% CL00, 1.22% CLQ22, 1.19% fell $1.92, or 1.8%, to settle at $104.27 a barrel on the New York Mercantile Exchange following a loss of 3% on Wednesday. Based on the front month contract, prices ended at their lowest since May 10, according to Dow Jones Market Data.
- Front month August Brent crude BRN00, 0.94% BRNQ22, 1.06%, the global benchmark, declined by $1.69, or 1.5%, at $110.05 a barrel on ICE Futures Europe, the lowest since May 18.
- Back on Nymex, July gasoline RBN22, 1.01% lost 1.8% to $3.7656 a gallon.
- August heating oil HOQ22, 0.09% fell 1.5% to $4.3379 a gallon.
- July natural gas NGN22, -0.03% dropped 9% to $6.239 per million British thermal units, the lowest since April 6.
Market drivers
Crude prices have lost ground since trading at three-month highs earlier this month, with analysts tying the decline in part to worries that aggressive efforts by the Federal Reserve and other central banks to rein in inflation could sharply slow the economy, undercutting demand.Crude pullbackCrude Oil Continuous ContractSource: FactSet2022June708090100110120$130
Federal Reserve Chair Jerome Powell, in two-day testimony on Capitol Hill, argued that the U.S. economy was robust enough to handle the Fed’s tightening efforts, but acknowledged that achieving a so-called soft landing would be a challenge.
Data released Thursday backed prospects for a recession, showing businesses suffered a sharp slowdown in June. The S&P U.S. manufacturing index slid to a nearly two-year low of 52.4.
Crude prices sank Wednesday as Powell “pointed at a possible recession,” said Ipek Ozkardeskaya, senior market analyst a Swissquote Bank, in a note.
“The next important test for the oil bears is the $100 level. Many investors don’t expect a downturn in oil prices below this level, pointing at a tight global supply, and the resilient demand,” the analyst said.
President Joe Biden on Wednesday called for a three-month holiday on federal gas and diesel taxes and urged states to also temporarily drop fuel taxes. Analysts were skeptical the proposal would win approval, but noted that if enacted would work to boost demand and could prolong high prices.
Suspending the federal gas tax would be good for oil demand, said Stephen Innes, managing partner at SPI Asset Management. But lingering uncertainties around the Organization of the Petroleum Exporting Countries’ output quota and recent COVID case count upticks are “raising eyebrows,” he said. OPEC and its allies will hold their next meeting on June 30.
Supply data
The American Petroleum Institute reported late Wednesday that U.S. crude supplies rose by 5.6 million barrels for the week ended June 17, according to sources. The API, which released its data a day later than usual because of Monday’s Juneteenth holiday, also reportedly showed a weekly inventory climb of 1.2 million barrels for gasoline, while distillate stockpiles fell by nearly 1.7 million barrels.
API data showed oil stocks at the Cushing, Okla., delivery hub were down by 390,000 barrels last week, sources said.
Inventory data from the Energy Information Administration were scheduled for Thursday, but the EIA said late Wednesday that data this week will be delayed due to “systems issues.” The government agency says it will release delayed data as soon as possible but for now, it marked the release date for the weekly petroleum status report as “TBD” for to be determined.
On average, analysts polled by S&P Global Commodity Insights said the EIA is expected to show crude inventories down by 3.7 million barrels for last week, along with supply increases of 500,000 barrels for gasoline and 600,000 barrels for distillates.
The EIA released its natural-gas supply data as usual Thursday. It said domestic supplies rose by 74 billion cubic feet for the week ended June 17. That compared with an average forecast for an increase of 70 billion cubic feet from analysts polled by S&P Global Commodity Insights.
marketwatch.com 06 23 2022
