Economy

Oil mixed amid supply and demand woes

China and Japan’s manufacturing and service industries post positive data after months of pandemic-induced recession

Sibel Morrow   | 05.07.2022
Oil mixed amid supply and demand woes

ANKARA 

Oil prices were mixed on Tuesday on low supply fears due to a strike in Norway’s oil and gas sector while the outlook of a global economic recession continues to fan weak demand woes.

International benchmark Brent crude was trading at $113.04 per barrel at 0705 GMT for a 0.40% decrease after the previous session closed at $113.50 a barrel.

American benchmark West Texas Intermediate (WTI) was at $109.72 per barrel at the same time for a 1.19% gain after the previous session closed at $108.43 a barrel.

Prices gained support after Norway's oil and gas sector workers on Tuesday began a strike that is set to have a substantial impact on gas exports, with anticipated losses of about 13% of the country’s daily gas exports, according to the Norwegian Oil and Gas Association (NOG).

Operations shut down at Equinor's Gudrun, Oseberg South and Oseberg East offshore platforms as a result of the stoppage.

The strike will continue on Wednesday at the Heidrun, Aasta Hansteen and Kristin offshore fields.

The NOG said nearly 130,000 barrels per day of oil and 292,000 barrels of oil equivalent per day of gas will be lost.

Further upward price movements were fueled by bullish data in the Japanese and Chinese services sectors, two of the world's biggest oil importers.

China's manufacturing and service industries have enjoyed a quick recovery since the country eased pandemic restrictions.

The country’s private Caixin services purchasing managers' index (PMI) rose to 54.5 in June, a record high for the past 11 months, ending its three-month contraction.

The manufacturing PMI also reached a 13-month high of 51.7 in June. A value of 50 or higher implies expansion, whereas a reading of 50 or lower indicates contraction.

In Japan, services sector activity grew at its fastest rate in almost eight years in June, as the removal of coronavirus restrictions improved sentiment among businesses, particularly in the tourism sector.

The final au Jibun Bank Japan Services purchasing managers' index (PMI) rose to 54.0, to supersede May’s growth of 52.6.

However, demand concerns heightened on high inflation rates in major economies and strict governmental monetary policies.

Investors are also awaiting industrial data on crude oil inventories in the US, the world’s largest oil-consuming country.

The American Petroleum Institute (API) will release its forecast data on US inventories later on Tuesday before the US Energy Information Administration’s (EIA) oil stock data on Wednesday.

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