Commodities and Futures News

Crude Oil Lower; Recession Fears Weigh on Demand Growth

2022.05.12 16:31

Crude Oil Lower; Recession Fears Weigh on Demand Growth

By Peter Nurse   

Investing.com — Oil prices weakened Thursday on fears recession, prolonged Covid-19 lockdowns in China and war in eastern Europe will severely hit global demand.

By 9:10 AM ET (1310 GMT), U.S. crude futures traded 0.6% lower at $105.11 a barrel, while the Brent contract fell 1% to $106.44 a barrel. 

Oil prices are under pressure this week amid worries that rising interest rates to combat inflation will severely curtail global economic growth, potentially plunging some regions into recession.

Gross domestic product data, released earlier Thursday, showed the British economy grew less than expected in the first quarter, by 0.8%, with preliminary data suggesting that it actually declined in March by 0.1%. 

The U.K. is the first of the G7 countries to release its first quarter GDP data, and offers a worrying guide for the numbers from other countries in the days ahead.

Prolonged COVID-19 lockdowns in the world’s top crude importer, China, as well as the strongest U.S. dollar in two decades have also impacted the market.

With this in mind, the Organization of Petroleum Exporting Countries cut its forecast for world oil demand this year in its monthly report for May.

The group of top producers now expects global demand to grow by an average of only 3.4 million barrels a day this year, down from a prior estimate of 3.7 million b/d. That masks a dramatic slowdown in growth between the first and the second quarters of this year – while first-quarter demand was up 5.2 million b/d, demand growth is expected to fall to 2.8 million b/d in the current quarter. 

The International Energy Agency also released its monthly report earlier Thursday, and while the Paris-based group rowed back on its previous claim that lower output from sanctions-hit Russia could result in a possible “global supply shock”, it still warned about a hit to demand.

“Soaring pump prices and slowing economic growth are expected to significantly curb the demand recovery through the remainder of the year and into 2023,” the IEA said.

“Extended lockdowns across China … are driving a significant slowdown in the world’s second largest oil consumer,” the agency added.

Turning to supply, the European Union has yet to agree on the details of the proposed embargo on Russian oil, with Hungary opposing the ban, and preventing unanimous agreement, because of its dependence on supply from Moscow.

“The Hungarians have said that they would only support the ban if there is an exemption for Russian pipeline oil flows,” analysts at ING wrote in a note. “If we were to see this, it would significantly water down the impact of the ban, given that the Druzhba pipeline flows amount to somewhere in the region of 1MMbbls/d, which is a significant portion of the roughly 2.3MMbbls/d of crude oil that the EU imported from Russia in 2021.”

Source

Related Articles

Leave a Reply

Back to top button
bitcoin
Bitcoin (BTC) $ 76,603.52 1.50%
vested-xor
Vested XOR (VXOR) $ 3,405.08 99,999.99%
ethereum
Ethereum (ETH) $ 2,885.88 7.90%
tether
Tether (USDT) $ 1.00 0.10%
solana
Solana (SOL) $ 197.05 5.10%
bnb
BNB (BNB) $ 601.03 2.15%
usd-coin
USDC (USDC) $ 1.00 0.00%
xrp
XRP (XRP) $ 0.555493 3.61%
dogecoin
Dogecoin (DOGE) $ 0.193975 0.19%
staked-ether
Lido Staked Ether (STETH) $ 2,882.49 7.75%
cardano
Cardano (ADA) $ 0.393483 9.85%
tron
TRON (TRX) $ 0.160627 1.99%
the-open-network
Toncoin (TON) $ 4.93 4.16%
wrapped-steth
Wrapped stETH (WSTETH) $ 3,407.16 7.90%
avalanche-2
Avalanche (AVAX) $ 27.59 3.96%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 76,342.45 1.36%
shiba-inu
Shiba Inu (SHIB) $ 0.000019 1.36%
weth
WETH (WETH) $ 2,881.18 7.68%
chainlink
Chainlink (LINK) $ 12.57 5.27%
bitcoin-cash
Bitcoin Cash (BCH) $ 384.25 3.12%
sui
Sui (SUI) $ 2.36 3.42%
polkadot
Polkadot (DOT) $ 4.15 1.36%
leo-token
LEO Token (LEO) $ 6.26 0.10%
usds
USDS (USDS) $ 1.00 0.15%
uniswap
Uniswap (UNI) $ 9.08 1.64%
litecoin
Litecoin (LTC) $ 71.93 2.85%
wrapped-eeth
Wrapped eETH (WEETH) $ 3,027.27 7.50%
near
NEAR Protocol (NEAR) $ 4.24 2.30%
aptos
Aptos (APT) $ 9.80 4.84%
pepe
Pepe (PEPE) $ 0.000011 10.81%
bittensor
Bittensor (TAO) $ 513.44 1.53%
internet-computer
Internet Computer (ICP) $ 7.78 1.09%
fetch-ai
Artificial Superintelligence Alliance (FET) $ 1.41 0.93%
dai
Dai (DAI) $ 1.00 0.11%
monero
Monero (XMR) $ 166.86 1.89%
stellar
Stellar (XLM) $ 0.100876 4.45%
ethereum-classic
Ethereum Classic (ETC) $ 20.11 4.43%
kaspa
Kaspa (KAS) $ 0.118265 0.06%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.02%
whitebit
WhiteBIT Coin (WBT) $ 19.49 0.69%
aave
Aave (AAVE) $ 185.83 8.87%
polygon-ecosystem-token
POL (ex-MATIC) (POL) $ 0.345609 4.49%
blockstack
Stacks (STX) $ 1.68 0.31%
crypto-com-chain
Cronos (CRO) $ 0.092253 8.66%
okb
OKB (OKB) $ 40.35 3.06%
dogwifcoin
dogwifhat (WIF) $ 2.39 0.59%
first-digital-usd
First Digital USD (FDUSD) $ 1.00 0.05%
arbitrum
Arbitrum (ARB) $ 0.581807 9.27%
mantle
Mantle (MNT) $ 0.679033 14.58%
filecoin
Filecoin (FIL) $ 3.76 3.20%