Oil prices are falling in volatile trading.. Brent crude is near $112
Oil prices declined, during trading today, Tuesday, July 5, 2022, with increasing fears of supply disruptions, amid a possible production cut in Norway.
Fears of a lack of supplies, in conjunction with an increase in demand for fuel, overshadowed a possible global recession with inflation recording record levels in many countries of the world.
Oil prices today
The price of the futures contract for the benchmark Brent crude – for September delivery – declined by 1.46%, to record 111.95 dollars per barrel.
The price of West Texas Intermediate crude futures – August delivery – declined by 1.57%, to $108.71 a barrel.
No settlement was reached on WTI on Monday, due to the Independence Day holiday in the United States.
Lack of supplies
Oil prices found support from supply concerns stemming from Western sanctions on shipments from Russia due to the conflict in Ukraine, concerns about the ability of major Middle Eastern producers to increase production and labor disputes in Norway.
The union that is leading the industrial strike said that Norwegian offshore workers began a strike today, Tuesday, that would limit oil and gas production.
For its part, the Norwegian oil company Equinor announced that the strike is expected to reduce oil and gas production by 89,000 barrels of oil equivalent per day, of which gas production is up to 27,500 barrels per day.
On Sunday, the country’s Oil and Gas Association expected to cut oil production by up to 130,000 barrels per day, starting on Wednesday, and according to Reuters calculations, this would be equivalent to about 6.5% of Norway’s production.
“While there are concerns about demand given the more bleaker macro outlook, the market is still expected to face a supply shortage for the rest of the year,” said ING’s head of commodity strategy, Warren Patterson.
For his part, said analyst at SBI Asset Management, Stephen Innes, “Oil is still struggling to get out of the current recession, as the market turns from inflation to economic desperation.”
Investors are becoming more concerned about demand, amid a broad tightening in global financial conditions, as the US Federal Reserve battles rampant inflation with rapid interest rate increases.
Australia’s central bank on Tuesday raised interest rates for a third month and announced further progress, as it struggled to contain rising inflation, even at the risk of triggering an economic deflation.
In South Korea, June inflation hit its highest level in 24 years, adding to fears of slowing economic growth and oil demand.