Salem Radio Network News Monday, May 16, 2022

Business

Oil prices fall despite lingering supply concerns

By Rowena Edwards

London (Reuters) -Oil prices fell on Friday, pressured by an unexpected rise in U.S. crude and fuel inventories while investors took profits after global oil benchmarks touched seven-year highs this week.

Brent crude futures were down 85 cents, or 0.9%, at $87.53 a barrel by 1434 GMT. The contract earlier fell by as much as 3%, the most since Dec. 20, having hit a seven-year high of $89.50 the previous day.

U.S. West Texas Intermediate (WTI) crude futures slid 87 cents, or 1%, to $84.68. The contract had fallen as much as 3.2%, also the most since Dec. 20, after rising to its highest since October 2014 on Wednesday.

The recent rally in crude prices appeared to run out of steam on Thursday when Brent and WTI ended the trading session with slim losses, but both benchmarks have gained more than 10% this year and are heading for a fifth straight weekly gain.

“The latest pullback is most likely due to a combination of pre-weekend profit-taking and the absence of fresh bullish catalysts,” said PVM analyst Stephen Brennock, noting bearish data from the Energy Information Administration (EIA).

The EIA reported the first U.S. stockbuild since November and gasoline inventories at an 11-month high, against industry expectations.

The EIA also reported a slight decline in refinery runs, indicating lower demand for crude.

However, analysts expect the pressure on prices to be limited owing to supply concerns and rising demand.

OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) with Russia and other producers, is struggling to hit its monthly output increase target of 400,000 barrels per day (bpd).

Tensions in Eastern Europe and the Middle East are also heightening fears of supply disruption.

Top Russian and U.S. diplomats played down any prospect of resolving their differences over Ukraine at talks on Friday.

UBS expects crude oil demand to reach record highs this year and for Brent to trade in a range of $80-90 a barrel for now.

Meanwhile, Morgan Stanley has raised its Brent price forecast to $100 a barrel in the third quarter, up from its previous projection of $90.

(Reporting by Rowena EdwardsAdditional reporting by Yuka Obayashi in TokyoEditing by David Goodman and Elaine Hardcastle)

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