Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil edges up, as investors worry about global demand

Published 2021-09-20, 10:54 p/m
Updated 2021-09-21, 05:11 p/m
© Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo

© Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo

By Stephanie Kelly

NEW YORK (Reuters) - Oil prices rose modestly in a see-saw session on Tuesday, as concerns about the global consumption outlook counterbalanced the struggle by big OPEC producers to pump enough supply to meet growing demand.

Both benchmarks were at one point up by $1 per barrel, but Brent crude pared gains and settled just up 44 cents at $74.36 a barrel, after falling by almost 2% on Monday.

The October West Texas Intermediate (WTI) contract, which expired on Tuesday, rose 27 cents to settle at $70.56 a barrel, after dropping 2.3% in the previous session. The more active November contract rose 35 cents a barrel to $70.49.

Brent and the November WTI contract earlier reached session highs of $75.18 a barrel and $71.48 per barrel, respectively.

"It seems to be a very nervous trade today," said Phil Flynn, senior analyst at Price Futures group in Chicago. "It's a little bit of ongoing concerns about the potential impact of demand going forward."

The TASS news agency said Russia believes global oil demand may not recover to its 2019 peak before the pandemic, as the energy balance shifts.

However, the Organization of the Petroleum Exporting Countries and its allies including Russia (OPEC+) struggled to pump enough oil in August to meet current consumption as the world recovers from the coronavirus pandemic. Several countries appeared to have produced less than expected as part of the OPEC+ agreement - suggesting a supply gap could grow.

Investors across financial assets have been rocked by fallout from the China Evergrande crisis that has harmed asset values in risk markets like equities.

"Traders worried that it could trigger a domino effect in China’s major debt-driven companies, and a rollover bearish effect for stocks and commodity prices," said Nishant Bhushan, oil markets analyst at Rystad Energy.

"However, given that all Chinese major banks and lending institutions are controlled by the government, there is a ray of hope in the market that the second biggest economy in the world would be able to absorb shock waves from the Evergrande."

In addition, the U.S. Federal Reserve is expected to start tightening monetary policy, which could cut investor tolerance for riskier assets such as oil. Fed policymakers began a two-day meeting Tuesday.

U.S. oil production is still recovering from hurricanes that hit the Gulf Coast region. Royal Dutch Shell (LON:RDSa), the largest U.S. Gulf of Mexico oil producer, said on Monday that damage to offshore transfer facilities from Hurricane Ida will cut production into early next year.

About 18% of the U.S. Gulf's oil and 27% of its natural gas production remained offline on Monday, more than three weeks after Ida.

U.S. crude oil, gasoline and distillate inventories fell last week, according to market sources, citing American Petroleum Institute figures on Tuesday, as numerous refineries and offshore drilling facilities remained shut following Hurricane Ida. [API/S] [EIA/S]

© Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo

Crude stocks fell by 6.1 million barrels for the week ended Sept. 17. Gasoline inventories fell by 432,000 barrels and distillate stocks fell by 2.7 million barrels, the data showed, according to the sources, who spoke on condition of anonymity.

Official U.S. government data is due on Wednesday.

Latest comments

Lol oil is red
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.