Salem Radio Network News Tuesday, May 17, 2022

Business

Oil slides but set for 5th weekly gain on lingering supply concerns

By Scott DiSavino

NEW YORK (Reuters) – Oil prices slid for a second day on Friday, pressured by an unexpected rise in U.S. crude and fuel inventories while investors took profits after the benchmarks touched seven-year highs earlier in the week.

However, both crude benchmarks were heading for a fifth straight weekly gain, rising over 1% this week. Prices have risen more than 10% so far this year on concerns over tightening supplies.

Brent futures fell 67 cents, or 0.8%, to $87.71 a barrel by 1:52 p.m. EST (1852 GMT), while U.S. West Texas Intermediate (WTI) crude fell 58 cents, or 0.7%, to $84.97.

Earlier in the week, both Brent and WTI rose to their highest since October 2014.

“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 Thursday’s 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.

Craig Erlam, market analyst at OANDA, said oil futures started their current decline “shortly after the EIA inventory data on Thursday, which showed a surprising rise against expectations” for a drop in crude stocks.

Erlam said the lower prices “came at a good time when crude was running into resistance at $90 and losing momentum.” Once futures break over $90 a barrel, he said it likely won’t be too long before we see triple digit oil prices.

Other analysts also said they expect the current 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).

In the United States, energy firms cut oil rigs this week for the first time in 13 weeks. [RIG/U]

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

Top U.S. and Russian diplomats made no major breakthrough at talks on Ukraine on Friday but agreed to keep talking to try to resolve a crisis that has stoked fears of a military conflict.

“With low spare OPEC+ capacity, low inventories and geopolitical tensions rising,” analysts at Bank of America said they expect to see Brent at around $120 a barrel in mid-2022.

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.

(Additional reporting by Rowena Edwards in London and Yuka Obayashi in Tokyo; Editing by Marguerita Choy, Elaine Hardcastle and David Evans)

Previous
Next

Editorial Cartoons

View More »

Michael Ramirez
Thu, May 12, 2022

X CLOSE