Crude oil futures were lower in mid-morning Asian trade July 4, though they had recovered from session lows as recession fears continued to loom, while China tightened COVID-19 curbs over some eastern cities.
At 10:54 am Singapore time (0254 GMT), the ICE September Brent futures contract was down 40 cents/b (0.36%) from the previous close at $111.23/b, while the NYMEX August light sweet crude contract fell 35 cents/b (0.32%) at $108.08/b.
Both crude oil markers had plunged by more than $1/b in early morning trading as recession fears continued to dominate sentiment in the new trading week ending July 8.
Further signs of weakness were seen in the US economy with the Institute for Supply Management’s manufacturing purchasing managers index, or PMI, coming in at 53 in June, media reports showed July 1, down from 56.1 the previous month.
“Economic data last week continues to paint a risky picture, with the [ISM manufacturing PMI] coming in way below expectations,” said IG market strategist Yeap Jun Rong in a July 4 note.
China meanwhile tightened COVID-19 curbs over the weekend in several eastern cities including Wuxi, a manufacturing hub in Jiangsu province, and Si county in Anhui province after fresh clusters emerged.
Analysts maintained that any oil price declines should be limited. A supply crunch arising from disruptions in Russia, Libya and Ecuador should keep oil prices supported, they said.
“Libyan exports have fallen to about one-third of last year’s level amid a worsening political crisis … This comes as OPEC itself struggles to maintain current levels,” said ANZ Research analysts Brian Martin and Daniel Hynes.
Trading volumes are expected to be thin in the early half of the week ending July 8 as the US celebrates the Fourth of July holiday. US markets will be closed July 4.
Dubai crude swaps and intermonth spreads were higher in mid-morning trade in Asia July 4 from the previous close.
The September Dubai swap was pegged at $99.10/b at 10 am Singapore time (0200 GMT), up $1.75/b (1.8%) from the July 1 Asian market close.
The August-September Dubai swap intermonth spread was pegged at $4.10/b at 10 am, up 30 cents/b over the same period, and the September-October intermonth spread was pegged at $2.85/b, up 20 cents/b.
The September Brent/Dubai EFS was pegged at $12.26/b, up 14 cents/b.
Source: Spglobal.com