Oil futures: Brent eases to $80/b in pre-weekend selloff
Quantum Commodity Intelligence – Crude oil futures eased back Friday as the week's firm rally ran out of steam, promoting a pre-weekend selloff as not even protests in Libya threatening to disrupt output and Shell suspending loadings in Nigeria enough to halt the slide.
Sep23 ICE Brent futures were trading at $80.022/b (1650 GMT), compared to Wednesday's settle of $81.36/b, but still comfortably up from last week's settle of $77.89/b.
At the same time, Aug23 NYMEX WTI was trading $75.52/b versus Wednesday's close of $75.89/b.
Futures had initially opened higher on Friday morning, trading around 10-week highs of $81.69/b as news of output disruptions at fields in Libya threatened to put further pressure on an already-tight supply picture for the global market as around 370,000 bpd was threatened.
In Nigeria, Shell said it had suspended loadings at its Forcados terminal due to a suspected leak at the site. That move has cut around 200,000 bpd from the market while under investigation.
Those moves added to what is set to be a third winning week in a row for crude, with Brent looking at a 3.5% gain at time of press after Saudi Arabia and Russia teamed up to cut around 1.5 million bpd of crude from the market.
The week's upwards moves were helped by a mild US inflation print midweek, with the 3% figure undershooting economist's expectations slightly and stoking expectations that the Federal Reserve could temper its interest rate hikes.
Underscoring the whole move has been a weaker US dollar, which slumped to its lowest levels in 15 months as an aggressive fiscal policy takes its toll on the greenback and allows other currencies to catch up.
China
Additional tailwind was generated by robust Chinese crude oil imports, which according to data from the customs authorities, surged to 12.7 million bpd in June, putting them at their second-highest level since the data series began.
Weak economic data from China, which showed producer prices decelerating in June versus May, may ironically add to the bullish sentiment, sparking speculation that the world's second-biggest economy may have to take measures to stimulate domestic demand.
For now, analysts are bearish, with FGE claiming in a research note that a decline in Chinese imports of crude looms.
Meanwhile, Urals exceeding the $60/b price cap added another level of uncertainty, which comes ahead of the 500,000 bpd reduction in exports next month.
"Refineries in India may be more reluctant to buy oil at prices above $60: apparently for fear of being sanctioned, Indian banks are demanding proof that the price of the oil shipment is below $60. It is perfectly possible therefore that Russia will have to grant bigger discounts," FGE said.
