The oil market remains wedged between the risks of a slowdown in the economy and a possible reduction in supply due to potential EU sanctions with a price ceiling on Russian oil.
Moscow, September 23 – IA Neftegaz.RU. Oil prices returned to decline today after trying to recover the day before.
On September 22, 2022, the price of Brent oil futures for November on the London ICE Futures exchange increased by 0.70% to $90.46/bbl.
Futures for WTI crude for November rose 0.66% to $83.49/bbl in electronic trading on the New York Mercantile Exchange (NYMEX).
On September 23, 2022, oil prices go down sharply.
By 11:30 am Moscow time, November Brent futures on ICE Futures dropped 2.05% to $88.61/bbl.
In NYMEX electronic trading, WTI futures for November fell 2.19% to $81.66/bbl.
U.S. natural gas futures are up slightly after falling the day before and are near $7.1/MMBtu ($254/1,000m3).
On September 22, 2022, NYMEX October natural gas futures fell 8.87% to $7.089/MMBtu.
By 11:30 Moscow time on September 23, quotes rose by 0.59% to 7.131 US dollars / million Btu.
Gas quotes in Europe hold above $2,100/1,000 m3.
November gas futures on the TTF hub (Netherlands) on ICE Futures by 11:30 Moscow time on September 23 were trading at 207.395 euros / MWh (2126.7 USD / 1000 m3), an increase compared to the settlement price of the previous day amounted to 2.05%.
The oil market remains influenced by fears of a global recession.
After raising the Fed rate by 75 b.p. and signals that the regulator intends not to slow down further until it sees signs of a slowdown in inflation, central banks around the world also raised interest rates, which increased the risk of an economic slowdown.
Investors are also evaluating the prospects for introducing a price ceiling for Russian oil as part of a new package of EU sanctions.
EU High Representative for Foreign Affairs and Security Policy Jean Borrell has already announced the EU’s plans for a new package of sanctions against Russia, which the EU plans to adopt in the near future.
A number of publications, incl. Politico, FT and Bloomberg reported that a new package of sanctions against Russia may include a cap on Russian oil prices, which is now being negotiated by the G7.
In particular, Bloomberg, citing informed sources, reported that the EU is seeking to introduce a price ceiling for Russian oil in a short time, these efforts were intensified after the announcement by Russian President Vladimir Putin of a partial military mobilization.
According to the agency, the price cap may be included in the new anti-Russian package of sanctions, which is planned to be adopted in the coming weeks.
The United States positions setting a price ceiling for Russian oil as a way to lower world oil prices, a position shared by the G7 countries.
However, a wide consortium of buyers, necessary to ensure the efficiency of such a mechanism, has not yet formed, incl. because of China, which still remains committed to market mechanisms in dealing with Russia.
In addition, the market continues to expect a reduction in supply in the market due to the actions of Russia, which officially warned against the supply of any energy carriers to countries that supported the price ceiling.
Also, the market is waiting for further actions by OPEC.+.
OPEC ministerial meeting scheduled for October 5, 2022+where oil production volumes for November 2022 are to be agreed.
At the previous OPEC meeting+held on September 5, 2022, it was decided to reduce the permitted production level by 100 thousand barrels per day compared to September.
Thus, the parameters of the OPEC agreement+ returned to August levels after a 100kb/d increase for September, which was done to gauge market reaction.
Nigerian Oil Minister T. Silva, in an interview with Bloomberg on September 22, admitted that OPEC countries could resort to further reductions in oil production if the market continues to decline, as the current price level affects the budgets of cartel members.
In addition to the level of production for November, at the October meeting of OPEC+ the issue of extending the OPEC agreement may be discussed+.
The current version of the OPEC agreement+ valid until the end of 2022, its extension has not yet been substantively discussed, although the flagships of the alliance, Russia and Saudi Arabia, have indicated their commitment to maintaining it.
At the beginning of September 2022, Deputy Prime Minister of the Russian Federation A. Novak admitted that the issue of extending the agreement could be submitted to an OPEC meeting+ in October 2022
In a telephone conversation on September 22, 2022, V. Putin and the Crown Prince of Saudi Arabia, M. bin Salman, highly appreciated the efforts within the framework of OPEC+confirming the intention to continue to adhere to the agreements reached.
US stock indices continued to decline on September 22.
The Dow Jones Industrial Average fell 0.4% to hit 30,076.68.
The Standard & Poor’s 500 lost 0.8% to 3757.99 points.
The Nasdaq Composite fell 1.4% to 11,066.81 points.
Bitcoin is declining slightly.
By 11:30 AM on September 23, 2022, Bitcoin was down 0.24% to $19,183.0/bitcoin.
The ruble is declining against the US dollar.
On September 23, 2022, by 11:30 Moscow time, the ruble depreciated against the US dollar by 0.26%, to 58.9955 rubles / dollar. USA.
Against the euro, the ruble rose by 0.89% to 57.396 rubles/euro.
On September 23, the central parity rate of the Chinese yuan against the US dollar fell by 121 bp on September 23, according to the China Currency Dealing Center. compared with the previous trading day, up 6.992 yuan / dollar. USA.
Against the ruble, the yuan fell to 8.5673 rubles/yuan.