DTN Weekly Oil Update
Oil Rebounds After Selloff, But Sentiment Remains Bearish
VIENNA (DTN) -- Oil futures closest to expiration on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange jumped more than $1 barrel (bbl) Monday morning, recouping a portion of last week's losses. Front-month WTI and Brent futures ended the week $3.36 bbl and $2.83 bbl lower, respectively, as sobering macroeconomic data from China and downward revisions to demand growth forecasts fanned oversupply fears, while the U.S. Dollar Index reached its highest value in more than a year.
Official government data showed Chinese industrial production slowing to 5.3% year-on-year in October, and crude oil throughput in refineries recording the seventh consecutive year-on-year decline. Reassessments of weaker-than-anticipated Chinese economic growth have led to multiple downward revisions to demand growth forecasts this year, with last week's OPEC report slashing its global growth forecast for the fourth consecutive month. A much more bearish IEA, meanwhile, last week warned of a large oversupply in 2025 based on non-OPEC production growth.
Given this bearish backdrop, Monday's rally seems to be at least in part based on the geopolitical risk premium tied to a possible escalation in the Russia-Ukraine war after the White House granted Ukraine permission to strike Russian territory with U.S. weapons, and a correction to perceived overselling last week.
Near 9:45 a.m. EST, WTI for December delivery was trading near $68.20 bbl, up $1.18, and Brent for January delivery was up $1.31, near $72.35 bbl. December RBOB gained $0.0344 gallon (gal) to $1.9837, and December ULSD advanced $0.0521 gal to $2.230.
Karim Bastati can be reached at karim.bastati@dtn.com