Oil losses 1.5% after mini-jump – Gas up slightly

Oil prices, which after adding more than $5 yesterday are back in negative territory today, lost their upward momentum as fears of an impending recession undercut concerns about tight supply.

In particular, oil Brent September moves with losses 1.4% and trades in 104.7 dollars the barrel, having fallen by $1.44.

Similarly, US WTI sees its August delivery, which expires on Wednesday, post losses 1.6% and is located in 100.9 dollars the barrel, having lost $1.59 today.

After a while, crude oil prices rallied sharply yesterday as the falling dollar combined with Gazprom’s invocation of “force majeure” forcing it to deliver reduced volumes of natural gas to Europe fired up buyers.

However, concerns about the impact on economies of aggressive monetary policy tightening by central banks worldwide resurfaced today, putting pressure on prices again.

In any case, however, market players do not expect oil to continue falling for a long time.

“Underlying pressures on the supply/demand balance are more pronounced than ever,” OANDA’s Jeffrey Haley notes in a note.

According to him, “Oil prices may have reached regional highs but it is clear that they do not look like they will move significantly lower than where they are today, unless we see a huge increase in production from OPEC+.”

Biden’s recent trip to Saudi Arabia, however, failed to elicit any commitment from the alliance’s top oil producer.

It is recalled that President Biden is asking Gulf producers to ramp up production to help lower oil prices and reduce inflation.

For his part, ING chief commodities analyst Warren Patterson says in his own note that the market has had time to digest the Biden visit with the conclusion that OPEC and its allies, including Russia, look unlikely in the near term (OPEC+) , to increase their production more aggressively than planned.

Gas hold-up with an eye on Gazprom

At the same time, investors are cautious in the European natural gas market, waiting to see what Gazprom is going to do with the flows, whether they will continue and in what volumes.

It is recalled that as it became known yesterday, the Russian energy giant invoked “force majeure” regarding reduced natural gas flows to Europe, in letters to at least three of its clients – one of which is the operator in Germany Uniper.

For its part, the Commission stated today that it does not expect natural gas supplies to Europe from Russia via the Nord Stream pipeline to resume when its scheduled maintenance is completed.

“We are working with the scenario that (the pipeline) will not come back into operation,” Commissioner Johannes Hahn told reporters on the sidelines of a conference in Singapore.

In this climate, the natural gas contract is trading today in Amsterdam with imperceptible fluctuations essentially, in relation to the volatility that prevails in the whole of 2022, presenting a small increase 1.5% at 159.5 euros the megawatt hour.

Source: Capital

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