(London) Oil prices wavered between gains and losses on Tuesday, caught between fears of recession weighing on demand, and supply cuts in several producing countries.
Posted at 7:04 a.m.
Around 6:30 a.m., a barrel of Brent from the North Sea, for delivery in September, lost 1.17% to 112.17 dollars.
The barrel of American West Texas Intermediate (WTI), for delivery in August, gleaned 0.01% to 108.45 dollars.
“The current conflicting signals given by the (bearish) demand and (bullish) supply of the oil equation make forecasting oil prices a laborious task,” commented Tamas Varga, analyst at PVM Energy.
“It’s impossible to predict when the focus will shift irrevocably from supply to demand,” he says.
In Norway, workers in the oil sector have joined a strike movement, “and their action will exacerbate the pain of rising prices”, predicts Susannah Streeter, analyst at Hargreaves Lansdown.
Libya, endowed with the most abundant reserves in Africa, is in the grip of a serious institutional crisis and is also experiencing production cuts.
Recession fears persist, however, weighing on demand.
Growth in economic activity in the euro zone slowed sharply in June in the private sector, to its lowest level in 16 months, according to the final composite PMI index published on Tuesday by S&P Global.
At the same time, the reduction in supply is pushing up the price of natural gas.
Since the start of the year, the price of Dutch TTF, the benchmark for natural gas in Europe, has risen by more than 110%, and reached 176.01 euros per megawatt hour on Tuesday.
This is a high since early March, when the price briefly hit an all-time high of over 300 euros shortly after the start of the Russian invasion of Ukraine.
A meteoric rise that Carsten Fritsch of Commerzbank explains by “fears of a shortage of gas during the winter months, Russia having reduced its gas deliveries by 60% via the Nord Stream gas pipeline”.
The analyst fears that Russian gas deliveries will shrink further.
“It would then be virtually impossible to replenish European natural gas stocks for next winter, which would require further political measures and reductions in gas consumption,” continues Carsten Fritsch.