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Oil prices go down off multi-year highs as US industrial output fell in September

October 20/2021

MOSCOW (MRC) -- Oil prices pulled back after touching multi-year highs on Monday, trading mixed as US industrial output for September fell, tempering early enthusiasm about demand, according to Hydrocarbonprocessing.

Production at US factories fell by the most in seven months in September as an ongoing global shortage of semiconductors depressed motor vehicle output, further evidence that supply constraints were hampering economic growth.

"The oil market started off with a lot of exuberance, but weak data on US industrial production caused people to lose confidence in demand, and China released data that intensified those worries," said Phil Flynn, senior analyst at Price Futures Group in New York.

Brent crude oil futures were down 20 cents or 0.24% at USD84.66 a barrel by 11:46 a.m. EST (15:46 GMT) after hitting USD86.04, their highest since October 2018.

US West Texas Intermediate (WTI) crude futures were 17 cents higher, or 0.2%, at US82.46 a barrel, after hitting USD83.87, their highest since October 2014. Both contracts rose by at least 3% last week.

The early push higher on Monday came as market participants looked to easing restrictions after the COVID-19 pandemic and a colder winter in the northern hemisphere to boost demand.

"Easing restrictions around the world are likely to help the recovery in fuel consumption," analysts at ANZ Bank said in a note, adding gas-to-oil switching for power generation alone could boost demand by as much as 450,000 barrels per day in the fourth quarter.

Cold temperatures in the northern hemisphere are also expected to worsen an oil supply deficit, said Edward Moya, senior analyst at OANDA.

Chinese data showed third-quarter economic growth fell to its lowest level in a year hurt by power shortages, supply bottlenecks and sporadic COVID-19 outbreaks. China's daily crude processing rate in September also fell to its lowest level since May 2020 as a feedstock shortage and environmental inspections crippled operations at refineries, while independent refiners faced tightening crude import quotas.

Global trade has swiftly recovered from pandemic lows, Bank of America commodity strategist Warren Russell said in a note. Trade levels are up 13% year to date, and 4% higher than 2019 levels. The trade indicates rising crude demand as economies recover from the pandemic, the analysts said. "Financial assets like oil should perform strongly into 2021," the analysts said.

As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.

We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.

We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.


mrcplast.com
Author:Margaret Volkova
Tags:Asia, Europe, crude and gaz condensate, medicine, petrochemistry, China, USA.
Category:General News
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