Oil Retreats over Rising Inventories
Oil closed with a third-straight loss on Wednesday as recession fears once again dominate trade on expectations of higher interest rates, with the Organisation of Petroleum Exporting Countries (OPEC) report showing rising global inventories and weak Chinese economic data adding to the drop.
West Texas Intermediate (WTI) crude for October delivery closed down US$2.09 to US$89.55 per barrel, Marketwatch reported. October Brent crude, the global benchmark, was last seen down US$2.83 to US$96.48.
The drop comes on rising recession worries following a hawkish speech last week from Federal Reserve chair Jerome Powell, who said the central bank will continue to raise rates until inflation returns to low levels, even at the cost of economic growth and lost jobs.
“Crude oil’s bounce from a six-month low has faded fast following Friday’s hawkish message from Jerome Powell, the Federal Reserve Chairman, which once again raised concerns that the central banks aggressive stance towards combatting runaway inflation would mean lower growth and with that lower demand for crude oil and fuel products,” Ole Hansen, head of commodity strategy at Saxo Bank, said in a note.
Slowing demand in China, the world’s largest importer, is also adding to expectations for weaker demand, as the country imposed fresh Covid-19 lockdowns in the cities of Dalian and Shenzhen, while factory orders fell in August.
In its weekly report, the Energy Information Administration said the US crude oil inventories fell by 3.3-million barrels last week, while gasoline inventories fell 1.2-million barrels. READ: Oil Retreats on Iran Talks, Rising U.S Crude Stockpiles
Also adding to the drop, OPEC’s technical committee, reporting ahead of the OPEC+ monthly meeting on Sept.5, raised its estimate for the surplus of supply in the global market to 0.9-million barrels per day, up from its July report estimating a surplus of 0.8-million bpd, according to reports.
Oil production rose to about 11.8 million barrels per day in June from about 11.6 million bpd the month prior, IEA report showed. Monthly gross natural gas production in the U.S. Lower 48 states rose to a record 109.3 billion cubic feet per day (bcfd) in June, the EIA said in the monthly report. #Oil Retreats over Rising Inventories
