By Adedapo Adesanya
The Brent crude futures traded lower at the market on Thursday by $1.26 or 1.1 per cent to $107.07 per barrel as the market remained muddled by a worrying outlook for demand amid supply disruptions from Libya.
Also, the price of the US West Texas Intermediate crude futures slid by $1.20 or 1.16 per cent during the session to $102.62 per barrel as the demand outlook in China continues to weigh on the market.
China, which is the world’s biggest oil importer, is slowly easing strict COVID-19 curbs that have hit manufacturing activity and global supply chains.
The International Monetary Fund (IMF) in its latest forecast highlighted risks in China when it cut its forecast for global economic growth by nearly a full percentage point on Tuesday.
However, the oil market remains tight with the Organization of the Petroleum Exporting Countries and allies led by Russia, together called OPEC+, struggling to meet their production targets.
Libya, a member of OPEC, which is exempted from quota cuts, on Wednesday said the country was losing more than 550,000 barrels per day of oil output due to blockades at major fields and export terminals.
This is happening amid a draw in US crude stockpiles in the week ended April 15, an indication of increased production and demand.
Analysts said market volatility is likely to pick up again soon, with the European Union (EU) still weighing a ban on Russian oil for its invasion of Ukraine, which Moscow calls a “special military operation”.
The indecisiveness to join the US and the United Kingdom may soon tire out the market which will lead to volatility, they noted.
Eight weeks after Russia launched its invasion of Ukraine on February 24, EU countries are evaluating ways to offset a potential ban on Russian oil, but no decisions have been made yet on the sixth package of sanctions.
While this continues, Russia’s oil production is estimated to have declined by 10 per cent since the start of the war, satellite images of flaring at oilfields and leaks from traders and Russian statistics suggest.
Russian oil and condensate production averaged around 10.2 million barrels per day in the first two weeks of April, based on secondary data analysed by Bloomberg.
The output in the first half of April is much lower than 11.1 million barrels per day production in February and 11 million barrels per day in March, Bloomberg noted.
A chronic decline in Russian oil production due to sanctions and “buyers’ strike” could lead to another, more sustained jump in oil prices.
Russia’s oil industry is already showing signs of slowing down as Western buyers shun Russian oil while the country struggles to replace lost sales in the West with sales in emerging Asian markets.
Modupe Gbadeyanka