Oct 13, 2022
VOT Research Desk
Market Insights and Analysis
As the IEA issues a global economic recession warning, traders also consider a scorching U.S. inflation report.
After a nearly five million-barrel weekly drop in U.S. distillate inventories, expectations of tight winter heating fuel supplies supported oil futures on Thursday as prices sought to recoup some of the losses suffered over the previous three trading sessions.
The IEA’s warning that OPEC+ supply cuts could tip the global economy into recession and a bigger-than-expected weekly rise in U.S. crude supplies were also taken into consideration by traders.
On the New York Mercantile Exchange, the price of West Texas Intermediate crude for November delivery CL.1, 1.82 percent CL00, 1.81 percent CLX22, 1.82 percent increased by $1.45, or 1.7%, to $88.72 a barrel.
On ICE Futures Europe, the December Brent crude BRN00, 1.85% BRNZ22 contract, the worldwide benchmark, rose $1.49 or 1.6% to $93.94 per barrel.
The price of heating oil HOX22 climbed by 2.62 percent to $4.0326 a gallon on Nymex in November, while the price of gasoline RBX22 increased by 2.40 percent to $2.6962.
On Nymex, gasoline RBX22 increased by 2.40 percent in November to $2.6962 per gallon, while heating oil HOX22 increased by 2.62 percent to $4.0326 per gallon.
In November, the price of natural gas NGX22 climbed by 1.32 percent to $6.631 per million British thermal units.
Market factors Crude prices surged after losing ground in the initial transactions. Domestic supplies of distillates, which include heating oil, decreased by 4.9 million barrels for the week ending Oct. 7, according to data provided by the U.S. government on Thursday.
When seen from a distance and in the context of this report, the market is beginning to express serious concerns regarding distillate supply, particularly as winter approaches.
Now flipping over to the fact that supplies are dangerously low as we head into winter,” he stated, referring to the recent market weakness brought on by worries regarding future interest rate increases by the Federal Reserve.
Early on Thursday, U.S. data revealed that the annualized increase in core CPI, which excludes volatile energy and food prices, increased to 6.6% from 6.3%, while the year-over-year increase in the consumer price index slowed to 8.2% in September from 8.3% in August. The Wall Street Journal surveyed economists and found that both figures exceeded their expectations.
The data sparked a brief asset selloff, but oil prices and the benchmark U.S. stock index moved higher.
In the meantime, the International Energy Agency stated in a monthly report that the Organization of the Petroleum Exporting Countries and its allies—a group known as OPEC+—decided last week to cut output by 2 million barrels per day, posing a threat to exacerbate a global energy crisis by driving up oil prices at a time when inflation is already high and economic growth is weak.
Energy Information Administration (EIA) data showed that U.S. crude inventories increased by 9.9 million barrels for the week ending on Oct. 7.A survey carried out by S&P Global Commodity Insights revealed that, on average, analysts anticipated a rise of 2.2 million barrels
