Oil up over persistent supply woes versus rebounding demand
Aug 29, 2022 - 11:47 AM
ANKARA (AA) – Oil prices rose on Monday over ongoing fears that OPEC will squeeze output to stabilize the market while data shows demand rising in Asia, Europe, and the US.
International benchmark Brent crude traded at $99.67 per barrel at 10.08 a.m. local time (0708 GMT), up 0.66% from the closing price of $99.01 a barrel in the previous trading session.
American benchmark West Texas Intermediate (WTI) was at $93.75 per barrel at the same time for a 0.74% gain after the previous session closed at $93.06 a barrel.
After Saudi Energy Minister Abdulaziz bin Salman pointed to production cuts to stabilize the market, another OPEC member, Oman, supported his warnings.
“Oman supports OPEC+ efforts to maintain market stability in the face of distortions and volatility,” Oman’s Oil Ministry said in a Friday tweet.
The OPEC group will also introduce a new production scheme, with a possible reduction in output as the current production cut pact will expire at the end of September.
Supply-side concerns further increased over ongoing violence in Libya, which may cause disruptions in the country’s oil production and exports. At least 32 people were killed and dozens injured in clashes between rival militias in the capital Tripoli.
Also, reports that Kazakhstan’s crude exports may be impacted for months exacerbated mounting supply fears.
Supply-side concerns came amid signs of stronger demand and soaring natural gas prices, which, experts say, is pushing power generators and industrial users to consume more diesel and fuel oil.
“The most recent Congestion Index data from TomTom shows Asia Pacific, European and North American traffic levels all posting strong weekly growth in the week to August 24,” Australia and New Zealand Banking Group (ANZ) commodity strategist Daniel Hynes said in an emailed note.
In China, congestion levels have also improved, Hynes said, citing data from Baidu.
Demand is also rebounding in the US, according to data released last week by the Energy Information Administration (EIA).
US commercial crude oil inventories dropped by around 3.3 million barrels against the market expectation of a fall of 450,000 barrels.
Gasoline inventories also decreased by 100,000 barrels to 215.6 million barrels over the same period.