Oil Prices Down to A Nine-Month Low

Oil prices fell to nine-month lows on Monday, weighed down by a predicted drop in fuel consumption as rising interest rates increase the risk of a worldwide recession, with a stronger USD adding to the price pressure.

Brent oil futures for November delivery fell 82 cents, or 1%, to $85.332 per barrel. The contract dropped to $84.512, its lowest level since January 14.

WTI crude for November delivery in the United States fell 74 cents, or 0.9%, to $78. WTI fell to $77.211, its lowest level since January 6.

The dollar, which measures the greenback against international currencies, reached a 20-year high. A stronger currency dampens demand for dollar-denominated oil. In addition, central banks in several oil-consuming countries raised interest rates in response to rising inflation, fueling fears of an economic slowdown and falling demand for oil. The OPEC+ will meet on October 5, agreeing to decrease output marginally at their previous meeting.

However, OPEC+ is producing much below its goal output, so that a further cut may have little effect on supplies.

According to data released this week, OPEC+ fell short of its target by 3.58M barrels per day in August, a larger loss than in July.


The Global Oil Flow Is Changing

According to CEO Russell Hardy at an industry event, Russian oil flows are rapidly heading eastward, while fuels produced in the East are moving westward. Meanwhile, as a European Union embargo on Russian crude takes effect in early December, US oil supply to Europe will rise. Oil exports from the United States to the European Union will exceed 1M barrels daily.

However, US producers have warned that importers should not expect significant supply increases because production is rising slowly. The reduction for the time is 900,000 BPD, for a total of 2.54M BPD during the second week of September. In comparison, the first week of the month saw 3.42M BPD.

Since the imposition of sanctions by the West, Russia has shifted its focus to the East, with China and India absorbing most of its oil.


Prices Decline as Norwegian Imports Rise

Wholesale gas prices in the UK and the Netherlands declined Monday morning as greater Norwegian imports, and robust LNG flows offset a projected surge in heating demand due to a cold spell next week.

TRNLTTFMc1 in the Netherlands declined from 8.90 euros to 172.10 euros per megawatt-hour (MWh).

Next week, a cold spell forecast in northwest Europe (NWE) will increase heating demand and sustain spot prices across European hubs, while gas-for-power demand is expected to climb on the day ahead due to low wind speeds. On Monday, total Norwegian gas pipeline nominations for Europe increased to 290M cubic meters per day (mcm/d), up from 268 mcm/d the day before. To strengthen the general functioning of the energy market, the European Union’s securities watchdog has urged a temporary halt on gas and electricity contracts when prices surge.

Germany struck a natural gas agreement with the United Arab Emirates as the European country scrambled to find alternatives to shut off Russian energy imports before winter. Germany is racing to secure energy imports from countries other than Russia as Moscow reduces gas flows to the region in reaction to Western sanctions over the Ukraine conflict. Supply cuts have driven European natural gas prices to jump by more than 300% this year, forcing Germany to turn to alternative and cheaper fuel sources, such as coal.

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