Oil futures: Prices retreat amid uncertain outlook, Brent below $95/b
Quantum Commodity Intelligence – Oil futures Thursday were trading lower as crude benchmarks struggled to hold the previous-session's gains amid further uncertainty, while China's economic outlook remained downbeat.
Front-month January ICE Brent futures were trading at $94.67/barrel (1920 GMT), compared to he day's range of $94.19-95.98/b Wednesday's settle of $96.16/b.
At the same time Dec22 NYMEX WTI was trading $88.17/b, versus Wednesday's settle of $90.00/b.
Markets were again torn between short-term demand concerns as Covid restrictions continue across large swathes of China, against a winter supply crunch with further Russian sanctions looming.
"With the deadline for Russian oil bans approaching fast, markets are increasingly focused on supply side issues," said ANZ commodity strategist Daniel Hynes.
US Deputy Treasury Secretary Wally Adeyemo will travel to Europe next week to discuss sanctions on Moscow and the implementation of the price cap on Russian oil.
Speculation about China reassessing its zero-Covid approach added to market volatility in both equities and commodities this week, but any such move is expected to be well into next year.
China's services activity contracted for the second consecutive month in October, as Covid-19 outbreaks and strict containment measures disrupted business operations and crippled overseas demand, a Caixin-sponsored survey showed on Thursday.
The Caixin China General Services Business Activity Index, which gives an independent snapshot of operating conditions in services industries such as retail and travel, dropped to 48.4 in October from 49.3 the previous month.
A number above 50 indicates an expansion in activity, while a figure below signals a contraction.
US stocks
Meanwhile, Wednesday's EIA report was seen as broadly supportive for oil markets as commercial US crude oil stocks fell by over 3 million barrels in the final week of October even as exports slowed, while domestic oil production shrunk.
"Crude oil production continues to disappoint, returning to a five-month low at 11.9m bpd," said Ole S Hansen, Head of Commodity Strategy at Saxo Group, although also noted that Cushing stocks reached their highest level since April.
At 436.8 million barrels, crude inventories were some 3% below the five-year average for this time of the year, while gasoline Inventories fell by 1.3 million barrels to an 11-year low of 206.6 million barrels by October 28, according to EIA data.
Prices also found support as geopolitical tensions were raised on reports that Saudi Arabia has shared intelligence with US officials that indicated Iran could be preparing for an imminent attack on the Kingdom.
The heightened concerns about a potential attack on Saudi Arabia come as the Biden administration hit out at Tehran for its crackdown on protests and for sending hundreds of drones, along with technical support, to Russia for use in its war on Ukraine.
The Federal Reserve Wednesday raised interest rates by three-quarters of a percentage point as it continued to battle inflation, with the rate hike largely factored into oil markets ahead of the announcement.
