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Crude oil futures roll back from multi-year highs on reports suggesting that global economic recovery was slowing down

October 19/2021

MOSCOW (MRC) -- Crude oil futures retreated further from multi-year highs in mid-morning trade in Asia Oct. 19 after a mixed overnight session, with sentiment bruised by a slew of reports suggesting that the global economic recovery was slowing down, reported S&P Global.

At 10:30 am Singapore time (0230 GMT), the ICE December Brent futures contract was down 4 cents/b (0.05%) from the previous close at USD84.29/b, while the NYMEX November light sweet crude contract fell 5 cents/b (0.06%) at USD82.39/b.

Investor confidence took a hit overnight after data showed US industrial production fell by 1.3% on the month in September, much weaker than the expected 0.1% rise. In addition, China's economy grew by a relatively paltry 4.9% in the third quarter from a year earlier, down from a 7.9% growth in the second quarter.

The weak economic data contributed to both contracts pulling back overnight from multi-year highs to end the day mixed. The front-month ICE Brent contract settled lower by 53 cents/b from a three-year high reached earlier in the session, while the front-month NYMEX crude contract settled up 16 cents/b, retreating from a seven-year high intra-day.

"The US industrial/manufacturing slowdown in September was a lot greater than anyone anticipated. Higher commodity prices, prolonged shutdowns in activity due to hurricane season, and the global chip shortage are having a greater impact on the economy," said OANDA Senior Market Analyst Edward Moya.

"This weakness has continued in early morning trading today. A fall in US industrial production in September would have not helped sentiment, along with weaker GDP numbers from China," said ING analysts Warren Patterson and Wenyu Yao in a note.

While most analysts believe the near-term outlook for crude prices remains bullish, there are signs US production is beginning to ramp up as producers respond to the quick run-up in prices over 2021.

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, crude and gaz condensate, petrochemistry, China, USA.
Category:General News
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