Oil fell for a second consecutive month as a deteriorating demand outlook offset concerns about tight physical supplies.
West Texas Intermediate (WTI) for September delivery on Friday rose 2.28 percent to US$98.62, bringing this week’s gain to 4.14 percent.
Brent crude for September delivery rose 2.1 percent to US$103.97, up 0.75 percent from a week earlier.
Photo: EPA-EFE
Futures nevertheless recorded their first back-to-back monthly decline since 2020 as fears of an economic slowdown fueled bearish sentiment across markets.
The US economy shrank for a second quarter as rampant inflation undercut consumer spending, while Citigroup Inc said there are signs the oil market is moderating.
Still, Exxon Mobil Corp does not see any signs of major fuel demand destruction.
“I wouldn’t tell you that we’re seeing something that would say we are in a recession, or near recession,” Exxon Mobil chief executive officer Darren Woods said.
While oil has given up most of the gains seen following Russia’s invasion of Ukraine in late February, the US benchmark is still up more than 30 percent this year. The surge in energy prices has underpinned oil producer earnings, with Exxon and Chevron Corp joining Shell PLC with record profits. A weaker US dollar has also helped to boost commodity prices.
“The underlying fundamentals for oil still remain quite strong,” said Edward Bell, senior director of market economics at Emirates NBD Bank PJSC. “There are serious risks around supply: sanctions on Russia that will kick in more meaningfully later this year, OPEC+ topping out in terms of what it can add to the market and the supply response in the US not coming on.”
Oil production in Texas and New Mexico dipped in May, US government data showed, in the latest sign that growth is slowing the prolific Permian Basin. Growth has largely stalled even as producers add drilling rigs due to rising inflation in everything from labor to equipment costs.
The spread between WTI and Brent, also known as the arb, has widened as a reduction in Russian crude flows tightened markets in Europe. The global benchmark was at a premium of around US$11 to US crude, compared with about US$6 at the start of the month.
The move is exacerbated by Brent crude’s September contract expiry, but the October spread is also wide at about US$7 a barrel.
“With no major signs of fuel demand destruction, oil seems like it will soon find a home above the US$100 a barrel mark,” Oanda Corp senior market analyst Edward Moya said.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to