Oil is trading with significant losses as the reopening of the Nord Stream pipeline removed concerns about Europe’s energy sufficiency, while the aggressive increase in interest rates by the ECB also adds to fears about crude oil demand levels.
In particular, the Brent sees the September delivery contract retreat by 2.34% at $104.68 the barrel having lost 2.24 dollars, while during the day it had lost up to 5 dollars, falling to 101.5.
Similarly, the American WTI September recedes to $97.05 the barrel with losses 2.9% or 2.7 dollars, while at the low of the day it was up to 94.59 dollars.
It’s worth noting, however, that trading volumes are light, adding to volatility as traders assess recent news, from the restart of Nord Stream 1 and an unexpected increase in US inventories to the aggressive stance adopted by the ECB.
As for the natural gas pipeline connecting Russia to Germany, after a barrage of scenarios during the days of maintenance works, Moscow finally resumed shipments albeit with reduced volumes to 40% of its capacity.
The head of Germany’s energy regulator, Klaus Mueller, said that “political uncertainty and the 60% cut in flows from mid-June remain in place”, but even so it is removing a large burden on Europe’s energy supply. which would need to resort to other commodities such as oil in the event that Russia were to completely turn off the tap.
“The resumption of natural gas flows via Nord Stream appears to indicate a more conciliatory attitude on the part of Russia regarding the movement of crude and other products to Europe in the coming weeks/months,” Jim Ritterbusch of Ritterbusch and Associates said in a note. of.
Meanwhile, US gasoline inventories yesterday showed an unexpected increase of 3.5 million barrels last week, in a sign that demand is not being curbed.
On the monetary policy front, the European Central Bank also started this increase in interest rates, the first after 11 years, even choosing the more aggressive path of 50 basis points which was not the prevailing scenario in the markets.
As the head of the Bank, Christine Lagarde, has said, with the uncertainties of the economic environment remaining, the focus is on curbing demand in order to reduce rampant inflation.
Something that may, however, intensify the economic slowdown and eventually lead to a recession, causing a significant blow to the demand for oil.
Source: Capital
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