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As the worries of the recession increase, oil expands to the second session of price losses

Oil futures extended their losses to the second session on Thursday, with US prices booking less than six weeks ahead as the recession worsened.

Management Price action
  • West Texas Intermediate Crude August Delivery CL.1,
    -1.93%

    CL00,
    -1.93%

    CLQ22,
    -1.93%
    After trading at 3% on Wednesday, the New York Mercantile Exchange traded down $ 1.92, or 1.8%, to $ 104.27 a barrel. According to the Dow Jones market data, prices have ended at their lowest level since May 10, based on next month’s deal.

  • Next month August Brent raw BRN00,
    -0.19%

    BRNQ22,
    -0.15%,
    The global benchmark ICE Futures fell $ 1.69 or 1.5% per barrel in Europe, down from May 18.

  • Back to Nimex, July Gasoline RBN22,
    -2.18%
    Losing 1.8% to $ 3.7656 a gallon, August Heating Oil HOQ22,
    -2.03%
    One gallon fell 1.5% to $ 4.3379.

  • Natural Gas NGN22, July
    -9.35%
    For every one million British thermal units, it dropped 9% to $ 6.239, down from 6 April.

Market drivers

Crude prices have hit the ground since analysts traded earlier this month for fears that the Federal Reserve and other central banks’ aggressive efforts to contain inflation could slow the economy and reduce demand.

Federal Reserve Chair Jerome Powell, in a two-day testimony on Capitol Hill, argued that the US economy was strong enough to handle the Fed’s tightening efforts, but acknowledged that achieving the so-called soft landing was a challenge.

The data, released Thursday, supports the prospects of a recession, showing that businesses suffered a sharp decline in June. The S&P US Production Index fell to a two-year low of 52.4.

Crude prices fell Wednesday as Powell “suggested a possible recession,” Epek Ozkardeskaya, senior market analyst at Swiss Coat Bank, said in a note.

Analysts said: “The next major test for oil bears is the $ 100 level.

President Joe Biden called for a three-month holiday on federal gas and diesel taxes on Wednesday and urged states to temporarily waive fuel taxes. Analysts were skeptical that the proposal would win approval, but noted that if implemented it would work to increase demand and expand higher prices.

Stephen Innes, managing partner of SPI Asset Management, said the suspension of the federal gas tax is good for oil demand. But uncertainties around the firm’s output quota for petroleum exporting countries and counts of recent COVID cases 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 on Wednesday that US crude supplies rose 5.6 million barrels in the week ending June 17, sources said. Releasing its data a day later than usual due to Monday’s June weekend vacation, the API reported that the weekly inventory for gasoline increased by 1.2 million barrels, while distillate stockpiles fell by about 1.7 million barrels.

Sources said that API data showed a decrease in the Cushing, Okla., Distribution center last week of 390,000 barrels.

The inventory data from the Energy Information Administration was scheduled for Thursday, but the EIA said late this week that the data was delayed this week due to “systems issues.” The government agency says it will release the delayed data as soon as possible but for now, the weekly petroleum status report has identified it as a “TBD” to determine the release date.

On average, analysts surveyed by S&P Global Commodity Insights reported that the EIA is expected to reduce crude inventory by 3.7 million barrels last week, with an increase of 500,000 barrels for gasoline and 600,000 barrels for distillates.

The EIA released its natural-gas supply data as usual on Thursday. Domestic supplies rose 74 billion cubic feet for the week ended June 17, it said. Compared to an average forecast of an increase of 70 billion cubic feet by analysts surveyed by S&P Global Commodity Insights.

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