The ICE contract for Brent crude oil dropped modestly on Sept. 1 while the New York market was closed for the Labor Day holiday in the US.
Oil prices have declined overall for about 2 months, which analysts attribute to weak demand from Europe and Asia. Barclays Inc. analyst Miswin Mahesh noted changes in world oil-demand patterns, saying the leading-demand regions are different this year than from years past.
“One instance of this shift can be seen in Asia, where Indian oil demand is now growing faster than that of China,” Mahesh said in a Barclays Commodities Weekly note.
Indian oil demand growth has accelerated this year with the momentum expected to continue going into next year, he said.
“Chinese implied oil demand has struggled to recover” from last year although stimulus measures during this year’s second half could help spur Chinese oil demand growth, he said.
“Elsewhere,” Mahesh said, “trends in refined products output globally are shifting as well, with oil producers such as the US, Russia, and the Middle East ramping up their refinery runs while import-driven Europe continues to cut.”
Economic index reports released Sept. 1 indicated Chinese oil demand could continue subdued.
China’s official purchasing managers index fell to 51.1 in August from 51.7 in July, the China Federation of Logistics and Purchasing said. Separately, HSBC Holdings PLC reported that its China manufacturing PMI for August fell to 50.2 from 51.7 in July.
Meanwhile, world oil traders continued to monitor Russia-Ukraine tensions. The European Union said it is considering additional sanctions against Moscow.
Russian Foreign Minister Sergei Lavrov suggested US officials should pressure Ukraine into negotiating a political compromise with pro-Russian rebels. Ukrainian President Petro Poroshenko plans a US trip during September.
Energy prices
The New York Mercantile Exchange was closed Sept. 1 for the Labor Day holiday. In early Sept. 2 trading, October crude oil contract was down from the Sept. 29 settlement.
The October ICE contract for Brent crude delivery declined 40¢ to close at $102.79/bbl on Sept. 1.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes on Sept. 1 was $100.98/bbl, up 9¢.
OPEC reported its basket’s averaged $100.75/bbl during August compared with $105.61/bbl in July and $107.89/bbl in June.
Contact Paula Dittrick at [email protected].
