Oil price falls again as economic worries dominate the sentiment
Get link
Facebook
Twitter
Pinterest
Email
Other Apps
The price of crude oil fell on Monday when the markets opened for business and it has since been back on the static trend despite the substantial production cuts by the OPEC+.
Although analysts hoped that the significant crude draw announced by the API, American Petroleum Institute, on Tuesday would push the prices up, it did not materialize. Nor did the slight rise in price of LNG, liquified natural gas, boost it, as it used to do for the past few years; the price of natural gas, in fact, rose as a cold weather front is currently sweeping across the northers hemisphere that has resulted in temperatures plummeting to single digits - once again.
As of 09:15 GMT, the prices of WTI, Brent and LNG recorded $77.22, $80.77 and $2.26 respectively.
The fact that the price of crude oil defies the over-the-top price hikes predicted by some analysts, clearly shows that the persistent worries over the economic outlook casts a long shadow over the usual factors that potentially can sway the prices of the commodity; the failure to boost the oil price by the significant fall in the US crude inventories is a case in point; the US is the world's top consumer of crude oil after all and its numbers really matter as far as oil prices are concerned; they are not trivial.
The news about yet another run on a US bank, meanwhile, has left the markets jittery. The First Republic Bank has announced that it lost over $100 deposits from savers in light of the two US banks that collapsed recently - Silicon Valley Bank and Signature Bank.
Although $30bn cash injection by its lenders calmed the markets to some extent, the persistent worries remain, leaving investors in a lurch before dispensing with their money.
Russian oil, meanwhile, appears to be flowing unhindered by man-imposed 'viscous drag' wherever it is welcome. The owners of the Indian refineries are rubbing their hands with glee as the commodity, on their watch, flows along the paths of least resistance to where it is in great need.
China is on a buying spree too. Since the world's second largest economy relies on the discounted Russian oil, its traditional suppliers in the Middle East clearly are already feeling the pinch and the latter resort to production cuts in order counter the inevitable impact.
The blow must have been amplified by the fact that three South Asian buyers have already cut down on their quotas of import from the Middle East owing to the corresponding economic troubles. Nepal, Sri Lanka and Pakistan, in this context, are in a league of their own as far as their low foreign reserves are concerned.
Since India and China so far managed to keep the threat of retaliatory Western sanctions at bay, many developing countries in other regions, especially in Africa, may be tempted to snap up Russian oil at steep discounts.
It is blatantly obvious that the world's second and third largest consumers of oil use intermediaries to get round the shipping and insurance barriers put up by the West, when it comes to transportation of oil through sea routes.
It is assumed that crude oil from Iran and Venezuela reach the markets in the same way despite the sanctions. Iran has been boasting about its steady rise in revenues from oil exports despite the heavy sanctions by the West.
All in all, the diminishing spending power of the consumers, worsened by sky-high inflation, has become a key factor that determines the price of crude oil - and its demand for that matter.
In this context, taking the US crude inventory data in isolation in order to gauge the price movements of crude oil is a meaningless statistical short-cut to misplaced complacency.
Credit: Google Maps With Iran's threat against Israel in a direct strike, the tension in the Middle East went up a few notches on the scale of uncertainty, as the United States made it clear once again that it would not be a passive observer if a conflict erupts. The rising tension came in the wake of the daring attack carried out by Israeli F-35 fighter jets on the building that was adjacent to the Iranian embassy in Damascus, the Syrian capital. Seven Iranian nationals, along with a few Syrians, died in the attack, two of them were from the elite Iranian IRGC - Republican Guards; they were very high ranking officers. In response to the attack, Ayatollahs Ali Khamenei, the Iranian supreme leader, said that Israel will be punished in kind, during an Eid message on Wednesday; he did not imply in what form the retaliation could come; nor did he say whether it was imminent, leaving the ambiguity open to interpretation by military and political analysts. The supreme leader, however,
The energy markets breathed a sigh of relief on Friday, as the military conflict between the arch-enemies in the Middle East, Israel and Iran, appeared to have subsided - at least, for now. As the news trickled in about an Israeli strike inside Iran in the morning on Friday, it was not clear what really was going on in the Islamic Republic: the airspace was closed all of a sudden in the wee hours on Friday; there were reports about explosions in the city of Isfahan, the third largest Iranian city of immense cultural significance as well as the home for major military sites and above all, Iranian nuclear sites. The Iranian authorities downplayed the attack while reopening the airspace for flights in a couple of hours. The US military officials, meanwhile, had already confirmed about the attack and the involvement of Israel in it. Israel, however, as usual, kept mum about it, neither denying nor admitting it. A four letter Tweet, 'lame', from a member of the Israeli war cabine
www.oilfutures.co.uk The members of the OPEC+, who met virtually last week, decided to leave the production cuts unchanged, perhaps in light of stagnating oil prices. Having failed to shore up the prices by tinkering with the supply side of the oil equation, the de facto leader of the organization, Saudi Arabia, even the raised the price of its flagship Arab Light crude for Asian buyers for the third successive time, while inadvertently leaving the loyalty of the old customers in the region on the line. Although the Kingdom had been in the habit of raising the price of oil for this particular domain in the recent past, only to bring it down a few weeks later, judging by the frequency of price rises, it may not happen very soon this time. According to the latest IMF forecast, Saudi Arabia has to sell oil above $96.20 to make a profit, provided that it maintains its production at 9.3 million barrels per day(bpd). As of 13:45 GMT on Monday 6, 2024, the prices of WTI and Brent were tra
