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The number of Americans filing for unemployment benefits for the week ending September 5 was 206,000, compared with expectations of 205,000 and a revised figure of 207,000 for the previous week.On September 10th, North American Blue Energy Partners (NABEP), a Venezuelan oil driller backed by the Trump administration, plans to more than double its crude oil production in just over two years. NABEP aims to increase its daily production from the current approximately 200,000 barrels to 500,000 barrels by the end of 2028. The company stated that supply growth has so far been funded by internal cash flow, and any external investment would help accelerate growth. NABEP has gained prominence in recent weeks following the Trump administrations signing of what it calls the largest oil deal in world history. Under the terms of the agreement, NABEP received 100-year concessions to exploit 17 oil fields with estimated proven reserves of 65 billion barrels. The company stated that the agreement with the U.S. government simply accelerates the trajectory of NABEPs growth plans.The Stoxx Europe 600 index fell further to 0.5%.On September 10th, the European Central Bank (ECB) raised interest rates for the second time since the start of the war with Iran in February, in response to signals that inflation would well exceed 2%. On Thursday, the deposit rate was raised by 25 basis points to 2.5%, in line with the forecasts of almost all economists surveyed. The ECB reiterated that it would not pre-commit to further action, but would decide on a case-by-case basis based on data. In its statement, it said: "The conflict in the Middle East continues to exert inflationary pressures, and inflation will remain well above target for an extended period. The outlook remains highly uncertain, with upside risks to inflation and downside risks to economic growth." Thursdays move puts Eurozone policymakers further ahead of their peers in addressing soaring energy prices—which have caused the fastest inflation in nearly three years. Traders believe the ECB will take further action, expecting two more rate hikes by mid-2027. This contrasts with the Federal Reserve and the Bank of England, which have not yet tightened monetary policy due to the Middle East conflict and are likely to remain on hold next week.Eurozone government bond yields rose after the European Central Bank raised interest rates.

WTI struggles at $87 as recession worries probe OPEC's forecast and supply deficit fears intensify

Daniel Rogers

Sep 14, 2022 11:42

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After reverting from the weekly high, WTI crude oil traders seek clear direction around $87.50 during Wednesday's Asian session. However, the present hesitation in the price of black gold may be attributable to the mixed concerns regarding the demand-supply matrix.

 

The Organization of the Petroleum Exporting Countries (OPEC) indicated in a monthly report that oil consumption will climb by 3,1 million barrels per day (bpd) in 2022 and by 2,7 million barrels per day (bpd) in 2023, which is unchanged from last month. Despite obstacles such as rising prices, the news also highlighted indications that major economies were performing better than projected.

 

The news that the United States intends to replenish its emergency oil reserves, as well as the German and European move to control Russian oil and gas prices, could also be favorable for energy prices. In addition, rumors that the Western oil deal with Iran is a long way off are bolstering fears of a supply bottleneck and should have helped energy bulls.

 

Tuesday's US inflation statistics revived concerns about the Federal Reserve's fast rate hike and exacerbated recession concerns. Also acting as downward drivers for WTI crude oil are expectations of economic slowdown due to China and Russia-related concerns.

 

In spite of this, the US Consumer Price Index (CPI) for August increased by 8.3% year-over-year, surpassing market expectations by 0.1%. However, the monthly data increased to 0.1%, exceeding the -0.1% projected and the 0.0% shown in previous assessments. The core CPI, or CPI excluding food and energy, likewise exceeded the 6.1% consensus and 5.9% prior to printing at 6.3% for the month in question.

 

It should be mentioned that the weekly prints of the American Petroleum Institute's (API) industry inventory report also contributed to the commodity's downfall. The API Weekly Crude Oil Stock climbed to 6,035 million during the week ending September 9, up from 3,645,000 the previous week.

 

In the future, the price of black gold may stay under pressure due to a stronger US dollar and economic troubles. Before today's official weekly inventory data from the U.S. Energy Information Administration, however, the supply crisis concerns could test the bears (EIA). Thursday's US Retail Sales for the month of August and Friday's preliminary reading of the September Michigan Consumer Sentiment Index will also warrant close attention.

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