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Oil settles nearly flat; recession worry vies with higher demand outlook

Commodities May 23, 2022 03:32PM ET
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© Reuters. FILE PHOTO: A maze of crude oil pipes and valves is pictured during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson/File Photo

By Arathy Somasekhar

HOUSTON (Reuters) -Oil prices were little changed on Monday, settling just slightly higher as worries over a possible recession vied with an outlook for higher fuel demand with the upcoming U.S. summer driving season and Shanghai's plans to reopen after a two-month coronavirus lockdown.

U.S. West Texas Intermediate (WTI) crude settled up 1 cent, or 0.01%, at $110.29 a barrel, while Brent crude futures settled up 87 cents, or 0.7%, to at $113.42.

"There are black clouds gathering around the financial markets here and it has started to impact crude oil," said Bob Yawger, director of energy futures at Mizuho.

"The economic wellbeing of the global economy is questionable at this point," he added.

Multiple threats to the global economy topped the worries of the world's well-heeled at the annual Davos economic summit, with some flagging the risk of a worldwide recession.

International Monetary Fund Managing Director Kristalina Georgieva said she did not expect a recession for major economies but could not rule one out.

Oil's losses were limited by expectations gasoline demand would remain high. The United States was set to enter its peak driving season beginning on Memorial Day weekend at the end of this week.

Despite fears that soaring fuel prices could dent demand, analysts said mobility data from TomTom and Google (NASDAQ:GOOGL) had climbed in recent weeks, showing more drivers on the road in places such as the United States.

To address a major supply crunch and blunt rising prices, the White House is weighing an emergency declaration to release diesel from a rarely used stockpile, an administration official said.

The White House is considering tapping the Northeast Home Heating Oil Reserve, created in 2000 to help with supply issues and used only once in 2012 in the wake of Hurricane Sandy. The impact from such a release would be limited by the relatively small size of the reserve, which only contains 1 million barrels of diesel.

The European Union's inability to reach a final agreement on banning Russian oil after that country's invasion of Ukraine, which Moscow calls a "special operation," has limited oil price gains. Hungary continues to hold out against the proposed ban, ensuring no sudden shock to supply.

"The persistent squeeze in refined petroleum products in the U.S. and ever-present Ukraine/Russia risk underpinned prices," said Jeffrey Halley, a senior market analyst at OANDA.

Shanghai, China's commercial hub, aims to normalize life from June 1 as its coronavirus caseloads decline.

Lockdowns in China, the world's top oil importer, have hammered industrial output and construction, prompting moves to prop up the economy, including a bigger than expected mortgage rate cut on Friday.

China said it would take targeted steps, including broadening its tax credit rebates, and rolling out new investment projects, to support its economy, state television quoted the cabinet as saying on Monday.

Oil settles nearly flat; recession worry vies with higher demand outlook
 

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Comments (8)
Alpha Omega
Alpha Omega May 23, 2022 2:07PM ET
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...''higher demand outlook.'' Are U Serious ?🤓
Matthew Petyk
Matthew Petyk May 23, 2022 9:02AM ET
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Liberals don't care about oil. They HATE fossil fuels. It doesn't matter that the most vulnerable in our society are suffering the most (their concern for them is fake anyway). They worship at the altar of "Climate Change" and want to force America into EV and alternate energy no matter the cost. They are the self-described elites. You don't actually think they care about the low/middle class do you???
Tre Hsi
Tre Hsi May 23, 2022 9:02AM ET
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"It doesn't matter that the most vulnerable in our society are suffering the most (their concern for them is fake anyway)."  -- as if the conservatives care about the poor and vulnerable in our society?  that's a good one...
ytrytry ytry
ytrytry ytry May 23, 2022 7:13AM ET
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dailyenergyinsider.com/news/24490-us-crude-oil-production-hits-record-levels-in-2019/
Carl McClurg
Carl McClurg May 23, 2022 6:46AM ET
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we have plenty of oil just two years ago we were energy independent. The US has NO leadership
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Tom Scurlock
Tom Scurlock May 23, 2022 6:46AM ET
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Ronald Warren good point RW!!! And where does 5X electric production come from???? I don’t think it’s Wind Turbines and Solar Panels!!!! But want you to think it does.
Brad Albright
Brad Albright May 23, 2022 6:46AM ET
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The US remains a net exporter of oil. Get your facts straight. You are embarrassing yourself.
Tre Hsi
Tre Hsi May 23, 2022 6:46AM ET
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Ronald Warren  who is forcing you to buy an EV? over 90% of new cars sold still use fossil fuels......stop being such a snowflake
Brad Albright
Brad Albright May 23, 2022 6:46AM ET
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Ronald Warren You are wrong. Because EV charging can take advantage of power plant facilities off-peak capacity, we would need to increase our national electricity production by about 5 percent. Get your facts straight.
Tre Hsi
Tre Hsi May 23, 2022 6:46AM ET
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Brad Albright   lol, 5x production, somebody learned his economics from Trump University
Miriam Morkhul
Miriam Morkhul May 23, 2022 4:05AM ET
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Oil 200$ next year.
Wilks Campbell
Wilks Campbell May 23, 2022 2:02AM ET
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Oil should drop because everyone know the talk of Shanghai ending the lockdown is fake ! The Chinese passing along a message that the westerners and their media just so naive that it is so easy to set them up .
Gershom Zvi
Gershom Zvi May 23, 2022 2:02AM ET
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When GOP comes back then oil will drop Wait for Trump or GOP President
Tre Hsi
Tre Hsi May 23, 2022 2:02AM ET
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Gershom Zvi  the last time oil went to $150/barrel was in 2007, as I recall that was when we had a GOP president
Brad Albright
Brad Albright May 23, 2022 2:02AM ET
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Gershom Zvi That's a prediction without any substance, but even if it were true, Americans would rather pay more for gasoline that have a lawless authoritarian blowhard back in office.
Tre Hsi
Tre Hsi May 23, 2022 2:02AM ET
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Brad Albright  "Americans would rather pay more for gasoline that have a lawless authoritarian blowhard back in office."  -- unfortunately I don't have the same faith on the american voters being that logical
Wilks Campbell
Wilks Campbell May 23, 2022 2:01AM ET
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Oil should drop because everyone know the talk of Shanghai ending the lockdown is fake ! The Chinese passing along a message that the westerners and their media just so naive that it is si easy to set them up .
Christopher Arntz
Christopher Arntz May 22, 2022 10:20PM ET
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LETS GO BRANDON
Tom Scurlock
Tom Scurlock May 22, 2022 10:20PM ET
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Watching the Golf Tourney yesterday. During the 3-hole playoff round, on the seventeenth fairway, someone yelled out “Lets Go Brandon”. Network wasn’t able to block it quick enough. . I loved it!!!
Brad Albright
Brad Albright May 22, 2022 10:20PM ET
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Tom Scurlock Yep. Real classy!
 
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