On Monday, oil prices reversed their losses and began to rise as concerns about a global recession were overshadowed by concerns about a restricted supply due to lower OPEC production, turmoil in Libya, and sanctions against Russia.
Early trading in Brent oil futures saw a loss of nearly $1, but by 0650 GMT, it was up 55 cents or 0.5 percent, to a barrel price of $112.18.
Futures for August supply of US West Texas Intermediate oil (WTI) crude rose 44 cents, or 0.4%, to $108.87 a barrel, after a previous drop of $1.
Maintaining a positive outlook on oil fundamentals. OPEC is obviously still failing to meet its agreed production levels, as Warren Patterson, head of ING’s commodities research, recently said. Sturdy time spreads indicate a strong market.
In June, production fell, suggesting the company is struggling to maintain current output levels.
OPEC’s ten members’ output in June slipped 100,000 barrels per day (bpd) to twenty-eight.52 million bpd, much below the 275,000 bpd increase they had promised, according to a Reuters poll.
OPEC’s new production limitations are more likely to be missed because of declines in Nigeria and Libya, as well as significant supply disruptions in Libya due to rising political upheaval, according to ANZ Analysis analysts in a note.
According to the Nationwide Oil Corp., Libyan exports have fallen to between 365,000 and 409,000 barrels per day (bpd), a decrease of roughly 865,000 bpd from normal levels.
A planned strike by Norwegian oil and fuel workers this week might limit the country’s oil and condensate production by 130,000 barrels per day as an additional cost to producers.
Tina Teng, an analyst at CMC Markets, believes that concerns about a global recession are limiting oil’s upward price movements.
As she put it, “rising costs and a drop in customer confidence have hurt the gasoline demand picture, while evidence shows that the US petroleum refinery capacity has increased.”.
In addition, an increase in the value of the U.S. dollar has a negative impact on commodity prices, including crude oil.
Despite the Federal Reserve’s “unconditional” commitment to reigning in inflation and mounting concerns about interest rate rises, consumer confidence in the United States fell to a record low in June.
To gauge how tight the market is, merchants may be keeping an eye on Saudi Arabia’s official oil prices for August, with refiners expecting a big rise approaching the May estimate. Reuters polled nine refining suppliers who predicted that Saudi Arabia’s flagship Arab Gentle crude official promotional value would jump by around $2.40 a barrel from the previous month.