Oil Prices Were Mostly Stable
Oil prices remained broadly stable as a relatively tight global supply picture competed with fears of a recession and a rising dollar.
Brent futures slipped 32 cents, or 0.2%, to $95.38 a barrel in October settlement.
West Texas Intermediate crude for September delivery in the United States was down 41 cents, or 0.3%, to $90.12. The more actively traded October contract fell 22 cents, or 0.3%, to $90.24.
High natural gas costs are increasing oil demand exacerbated by limited Russian supplies.
Brent crude hit about $139 per barrel in early March but has since fallen as inflation has reached multi-decade highs.
The pipeline operator that supplies about 1% of global oil via Russia has announced that it will reduce output again due to damaged equipment.
In the meantime, the dollar index hit a five-week high on Monday. Because much of the world’s oil trading is in dollars, a stronger US currency is generally negative for the market.
Meanwhile, concerns about decreasing gasoline consumption in China, the world’s top oil importer, pushed up prices due partly to a power outage in the southwest.
Beijing lowered its benchmark lending rate on Monday as part of efforts to revitalize an economy hampered by a real estate crisis and a recurrence of COVID-19 cases.
Russian Oil and Gas Export Cuts
Europe faces further energy supply disruptions due to damage to a pipeline system that transports oil from Kazakhstan through Russia, the pipeline operator warned on Monday, adding concerns about gas supply drops.
CPC, which handles roughly 0.99% of world oil and is owned by Russian pipeline company Transneft, has blocked shipments from two of its three mooring sites at a Black Sea terminal.
Natural gas prices rose on Monday, fueled by disruptions at Norwegian and UK gas fields.
The British gas price for immediate delivery increased by 84 pence to 451 pence per therm, while the day-ahead contract increased by 119 pence to 490 pence per therm.
The operator of Ukraine’s gas transmission system stated that it and the Polish gas pipeline infrastructure could send Russian gas to Europe and compensate for the Nord Stream suspension.
One SPM can handle less than 70% of typical terminal capacity, leaving Kazakhstan, which relies heavily on CPC for oil exports, with the risk of reducing output.
CPC has reduced exports on many occasions in the last six months.
CPC Blend crude oil exports for August were at 5.116M tonnes. The consortium has yet to provide new figures.
Turkey Has Doubled Its Russian Oil Purchases
Turkey more than doubled its imports of Russian oil this year, according to Refinitiv Eikon statistics released on Monday, as the two countries prepare for more collaboration in commerce, particularly in energy trade, in the face of Western sanctions against Moscow.
Trade between Turkey and Russia has been thriving since the spring when Turkish companies that are not barred from doing business with Russian counterparts came in to fill the hole left by EU corporations leaving Russia following its invasion of Ukraine earlier this year. Russia calls its efforts in Ukraine as a ‘special military operation’.
Turkey has raised its Russian oil imports, including Urals and Siberian Light grades, to more than 200,010 barrels per day (BPD) this year, up from 97,000 BPD in the same period in 2021.
Turkey did not criticize Russia for its activities in Ukraine, claiming it still relies on the Russian energy supply. Early in August, Russian President Vladimir Putin and Turkish President Tayyip Erdogan met and agreed to expand business collaboration.