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Oil Prices Drop as Demand Worries Overtake Supply Concerns

Published 07/20/2022, 11:33 PM
Updated 07/20/2022, 11:39 PM
© Reuters.

By David Ho

Investing.com - Oil prices fell on Thursday, continuing a trend sparked by growing demand concerns after U.S. government data showed tepid gasoline demand despite tight global supply.

Brent oil futures slipped by 0.84% to $106.02 by 12:44 AM ET (4:44 AM GMT), while crude oil WTI futures fell 1.00% to $98.88.

Oil prices have been see-sawing as traders struggled with tighter global supply due to the loss of Russian barrels after the country's invasion of Ukraine. Questions over a recession also weakened energy demand.

Furthermore, U.S. gasoline inventories rose 3.5 million barrels last week, government data showed on Wednesday. This goes beyond analysts' forecasts in a Reuters poll for a 71,000-barrel rise.

Product supply of gasoline was about 8.5 million barrels per day, or about 7.6% lower than the same time a year ago, the data showed. It is generally regarded as a proxy for demand.

"We expect Brent oil futures to fall to US$100/bbl by Q4 2022, implying a modest fall from current levels," said Vivek Dhar, Commonwealth Bank commodities analyst, in a note.

In Libya, the National Oil Corp shared that crude production has resumed in several oilfields, after lifting force majeure on oil exports last week.

But one of Canada's major oil export arteries, the Keystone pipeline, was operating at reduced rates for a third day on Wednesday, operator TC Energy (NYSE:TRP) stated. Repairs continued on a third-party power facility in South Dakota.

 

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