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Oil rises as tight supply trumps recession fears

Commodities Jul 04, 2022 01:05PM ET
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2/2 © Reuters. Storage tanks are seen at the Petroineos Ineos petrol refinery in Lavera, France, March 29, 2022. Picture taken March 29, 2022. REUTERS/Benoit Tessier 2/2

By Noah Browning

LONDON (Reuters) -Oil rose on Monday as supply concerns driven by lower OPEC output, unrest in Libya and sanctions against Russia outweighed fears of a demand-sapping global recession.

Euro zone inflation hit yet another record high in June, strengthening the case for rapid European Central Bank rate increases, while U.S. consumer sentiment hit a record low.

Brent crude rose $2.26, or 2%, to $113.89 a barrel by 12:47 p.m. ET (1648 GMT) after falling more than $1 in early trade. U.S. West Texas Intermediate (WTI) crude rose $2.20, or 2%, to $110.63, in thin volume during the U.S. Independence Day holiday.

The Organization of the Petroleum Exporting Countries (OPEC) missed a target to boost output in June, a Reuters survey found. [OPEC/O]

In OPEC member Libya, authorities declared force majeure at Es Sidr and Ras Lanuf ports as well as the El Feel oilfield on Thursday, saying oil output was down by 865,000 barrels per day (bpd).

Meanwhile, Ecuador's production has been hit by more than two weeks of unrest that has caused the country to lose nearly 2 million barrels of output, said state-run oil company Petroecuador.

Adding to potential supply woes, a strike this week in Norway could cut supply from Western Europe's largest oil producer and reduce overall petroleum output by about 8%.

"This backdrop of mounting supply outages is colliding with a possible shortage in spare production capacity among Middle Eastern oil producers," said Stephen Brennock of oil broker PVM, referring to the limited ability of producers to pump more oil.

"And without new oil production hitting markets soon, prices will be forced higher."

British Prime Minister Boris Johnson on Monday called on the OPEC+ producer group to produce more oil to tackle a cost-of-living crisis.

Brent crude has come close this year to topping the 2008 record high of $147 a barrel after Russia's invasion of Ukraine added to supply concerns.

Soaring energy prices on the back of bans on Russian oil and reduced gas supply have driven inflation to multi-decade highs in some countries and stoked recession fears.

Oil rises as tight supply trumps recession fears
 

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Comments (10)
Andrew Ulferts
Andrew Ulferts Jul 05, 2022 12:58AM ET
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The previous day there was an article posted that said the exact opposite. It’s actually still posted. News is not real.
FOX MAN
Foxman Jul 04, 2022 11:46PM ET
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Trump?
Nils Hullmann
Nils Hullmann Jul 04, 2022 7:00PM ET
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the middle east hates eu and us they will enjoy the show how citizen will riot
Rod Quasney
Rod Quasney Jul 04, 2022 5:14PM ET
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Saudi Arabia have pumped 1m bpd more than their quota ans they missed their June quota by 213k bpd. Also, China and India are buying Russian oil at a $30.00 a barrel discount. Keep drinking the shortage Kool-aid, doesn't anyone actually research anymore?
Imre Zsombor Varga
Imre Zsombor Varga Jul 04, 2022 3:15PM ET
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- I am waiting for the economic crisis not seen in 200 years. It is clear to everyone that this is bankruptcy. And is there anyone still buying on the stock market? Good luck... losing
Andrew Ulferts
Andrew Ulferts Jul 04, 2022 3:15PM ET
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Oil stocks are good to go.
Gábor Kardos
Gábor Kardos Jul 04, 2022 1:54PM ET
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how can there be a shortage if china and india buy all the oil from russia and reselling to EU?
Francis Lim Wei
Francis Lim Wei Jul 04, 2022 1:17PM ET
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its a global shortages of oil right now after turning off russian oil tap. OPEC missed target is expected as they cannot produce and replace the Russians market share within a short timeframe it will take months for the prices to stabalise.
Jeffery Tan
Jeffery Tan Jul 03, 2022 11:34PM ET
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when oil price up, saying inflation. when oil price down, saying recession.
Jack Waters
Jack Waters Jul 03, 2022 11:34PM ET
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called the rock and the hard place
Pavan Patel
Pavan Patel Jul 03, 2022 9:37PM ET
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Theybthink becauserecession is near these stupidnamericans wont run their credit card bill up to buy gas is wild…….. they will
Pavan Patel
Pavan Patel Jul 03, 2022 9:37PM ET
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Clay Douglass hahahahahahhhaha ur funny dawg how much your house cost il buy it cash
Pavan Patel
Pavan Patel Jul 03, 2022 9:37PM ET
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Clay Douglass dummy watch your a ducking retard **********
Pavan Patel
Pavan Patel Jul 03, 2022 9:37PM ET
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Brad Albright lol do even have more than 100k in your checkings?? Your a brokie lil bro… you wouldnt even come close to a number like that BROKIE
Brad Albright
Brad Albright Jul 03, 2022 9:37PM ET
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So, there is a number?
Barani Krishnan
Barani Krishnan Jul 03, 2022 9:37PM ET
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Pavan Patel, stop sounding like the arrogant desi fool. Ok?
Suraj Gundapaneni
Suraj Gundapaneni Jul 03, 2022 9:34PM ET
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With the tightening supply, this is just a brief pull back. Many oil rich countries like Iran, Libya, venezuela, Russia are in one or the other kind of geopolitical or political turmoil. Russia cut down its supply and is planning for more, so did libya and Iran taming its supply to use it as a political advantage against US. Oil is destined to double by this winter. Brace for impact.!!
 
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