Brent retreats on concerns of softening demand

The front-month ICE Brent contract has declined by $1.28/bbl on the day, to trade at $68.71/bbl at 09.00 GMT.

IMAGE: (L-R) Russia, Saudi and US flags against oil pump and oil refining factory at night. Getty Images

Upward pressure:

Rising geopolitical tensions in the Middle East and Houthi attacks on commercial vessels in the Red Sea have raised concerns of supply disruptions in the oil market.

US President Donald Trump said he has a “major statement to make on Russia on Monday” in a telephonic interview with media network NBC, without elaborating on his planned course of action.

“This could leave the market nervous over the potential for further sanctions on Russia,” ING’s head of commodity strategy, Warren Patterson said. Additional US sanctions on Russian crude could tighten the global oil market further and add upward pressure on prices.

Downward pressure:

OPEC members could be mulling a pause in further supply hikes from October, Daniel Hynes, senior commodity strategist at ANZ said.

“However, the market took the decision to subsequently pause any further increases as a sign that the market can’t handle any more oil amid weakening demand,” he explained.

The US Energy Information Administration (EIA) reported a 7.1 million barrels surge in US crude stockpiles for the week ending 4 July, adding further downward pressure on Brent’s price.

By Konica Bhatt

Please get in touch with comments or additional info to news@engine.online