Oil closed higher on Wednesday, recouping some of the previous days’ losses that pushed both US crude and Brent below $100 a barrel yesterday, although US supply rose for a second week in a row and traders continued to they are concerned about demand.
Natural gas futures, meanwhile, jumped more than 8% today as weather forecasts boost the likelihood that demand will pick up.
Energy Information Administration (EIA) data released earlier today as part of the weekly US oil supplies report revealed a significant drop in demand for gasoline. Total gasoline supply, a gauge used to track demand, fell 8 percent over the past four weeks to an average of 8.7 million barrels a day, according to the EIA.
However, as Phil Flynn, senior market analyst at The Price Futures Group notes, it appears that “the incredible drop in demand has been priced into the recent collapse in prices.” Flynn also notes that “the drop in demand raises larger questions about the economy and whether or not the world can withstand record inflation.”
Meanwhile, the International Energy Agency said on Wednesday that the worst oil supply crisis in decades is showing early signs of easing as slowing growth curbs demand and sanctions on Russia’s oil industry have less impact on production than originally expected.
The IOC cut its forecast for 2022 demand by 240,000 bpd to 99.2 million bpd in its monthly report, as well as its 2023 demand estimate, which it sees down by 280,000 barrels per day less, at 101.3 million barrels per day.
But IOC executive director Fatih Birol warned this week that the worst of the energy crisis may not be over and that Europe faces a “very, very difficult” winter as it faces limited gas supplies from Russia.
Amid this sentiment, West Texas Intermediate crude for August delivery rose 46 cents, or 0.5%, to settle at $96.30 a barrel today.
Brent crude for September was the smallest gainer, which added 8 cents, or 0.1%, to settle at $99.57 a barrel.
It is noted that both contracts closed yesterday at the lowest level since April of this year.
As for US natural gas, as mentioned above, it rose 8.5%, with the contract for August delivery closing at $6.689 per million British thermal units.
Source: Capital
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