Oil prices slid early on Monday as investors refocused on tight supply, although the mood remained shaky following a 6% drop the previous day due to fears about slowing global economic growth and fuel consumption. Due to Western sanctions, most nations are still unable to obtain Russian oil. The damage has been offset in part by the release of strategic petroleum reserves, spearheaded by the US, and a ramp-up in output from OPEC+, albeit this is reducing the world’s buffer against additional supply disruptions.
Brent oil futures were up 20 cents, or 0.2%, to $113.32 a barrel by 01.05 GMT, after jumping as high as 1% earlier. Front-month prices fell 7.3% last week, the first weekly drop in five weeks. The price of West Texas Intermediate crude in the United States was $109.55 a barrel, down 1 cent after climbing more than $1 in early morning trade. Last week, front-month prices fell 9.2%, the first dip in eight weeks.
The number of oil and gas rigs, a leading predictor of future output, increased by seven to 740 in the week ending June 17, the most since March 2020. If Washington continues on its present path, the US strategic reserve would reach a 40-year low of 358 million barrels by October, according to ANZ. Nonetheless, US oil and gas output is increasing.
China’s oil product exports, long a significant exporter, have continued to fall, keeping global supplies tight. Despite slowing domestic demand, the country’s gasoline exports decreased 45.5% year on year in May, while diesel exports fell 92.7%, according to Chinese customs statistics released on Saturday.
However, as a result of sanctions related to the Ukraine crisis, Russia has become China’s largest oil supplier, selling cheap petroleum to Beijing. China has reportedly refused to call the Ukraine war an invasion by Russia. According to official estimates, Russian oil imports increased by 55% year on year to a record level in May.
