Thursday, December 2, 2021

    Oil prices ease off highs as U.S. factory data weighs on market

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    Naija247news Editorial Team
    Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

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    NEW YORK, Oct 18 (Reuters) – Oil prices pulled back after touching multi-year highs on Monday, trading mixed as U.S. industrial output for September fell, tempering early enthusiasm about demand.

    Production at U.S. factories fell by the most in seven months in September as an ongoing global shortage of semiconductors depressed motor vehicle output, further evidence that supply constraints were hampering economic growth. read more

    “The oil market started off with a lot of exuberance, but weak data on U.S. industrial production caused people to lose confidence in demand, and China released data that intensified those worries,” said Phil Flynn, senior analyst at Price Futures Group in New York.

    Brent crude oil futures were down 20 cents or 0.24% at $84.66 a barrel by 11:46 a.m. EST (1546 GMT) after hitting $86.04, their highest since October 2018.

    U.S. West Texas Intermediate (WTI) crude futures were 17 cents higher, or 0.2%, at $82.46 a barrel, after hitting $83.87, their highest since October 2014.

    Both contracts rose by at least 3% last week.

    The early push higher on Monday came as market participants looked to easing restrictions after the COVID-19 pandemic and a colder winter in the northern hemisphere to boost demand.

    “Easing restrictions around the world are likely to help the recovery in fuel consumption,” analysts at ANZ Bank said in a note, adding gas-to-oil switching for power generation alone could boost demand by as much as 450,000 barrels per day in the fourth quarter.

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    Cold temperatures in the northern hemisphere are also expected to worsen an oil supply deficit, said Edward Moya, senior analyst at OANDA.

    “The oil market deficit seems poised to get worse as the energy crunch will intensify as the weather in the north has already started to get colder,” he said.

    “As coal, electricity, and natural gas shortages lead to additional demand for crude, it appears that won’t be accompanied by significantly extra barrels from OPEC+ or the U.S.,” he said.

    Prime Minister Fumio Kishida said on Monday that Japan would urge oil producers to increase output and take steps to cushion the impact of surging energy costs on industry.

    Chinese data showed third-quarter economic growth fell to its lowest level in a year hurt by power shortages, supply bottlenecks and sporadic COVID-19 outbreaks. read more

    China’s daily crude processing rate in September also fell to its lowest level since May 2020 as a feedstock shortage and environmental inspections crippled operations at refineries, while independent refiners faced tightening crude import quotas. read more

    Global trade has swiftly recovered from pandemic lows, Bank of America commodity strategist Warren Russell said in a note. Trade levels are up 13% year to date, and 4% higher than 2019 levels. The trade indicates rising crude demand as economies recover from the pandemic, the analysts said.

    “Financial assets like oil should perform strongly into 2021,” the analysts said.

    Reporting by Jessica Resnick-Ault and Noah Browning; additional reporting by Jessica Jaganathan; editing by David Evans and Chris Reese

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