As economic concerns rise, oil uncertainty continues

20 Jun 2022 , 08:32 AM

Early on Monday, oil prices slid as investors refocused on tight supply, however, sentiment remained shaky after a 6% drop the previous day amid fears about slowing global economic growth and fuel demand.

Brent crude futures were up 20 cents, or 0.2%, to $113.32 a barrel at 0105 GMT, after jumping as much as 1% earlier. Last week, front-month prices fell 7.3%, the first weekly drop in five weeks.

The price of U.S. West Texas Intermediate crude was $109.55 a barrel, down 1 cent after jumping more than $1 earlier in the day. Last week, front-month prices fell 9.2%, the first drop in eight weeks.

Due to Western sanctions, most countries are unable to obtain Russian oil. The damage has been partially offset by the release of strategic petroleum reserves, led by the United States, and a ramp-up of output from OPEC+, while the world’s buffer against additional supply interruption is shrinking. Despite this, oil and gas production in the United States is increasing.

The oil and gas rig count, a leading indicator of future output, increased by seven to 740 in the week ending June 17, the highest level since March 2020, according to Baker Hughes Co, an energy services firm.

Exports of oil products from China, which was formerly a significant exporter, have continued to fall, putting pressure on world supply.

Despite stalled domestic demand, China’s gasoline exports declined 45.5 % in May and diesel exports tumbled 92.7 % as companies ran out of export quotas, according to Chinese customs statistics released on Saturday.