Oil prices edged lower in the early trading session today amid concerns that the US-led trade war will hurt energy demand, continuing the declines seen towards the end of yesterday, ING’s commodity experts Ewa Manthey and Warren Patterson note.
Downside risks for oil prices continue to persist
“ICE Brent lost almost 1% this morning, with prices moving back towards $65/bbl. The latest release of the US economic data signalled the slowing of the economy, while China pushed back against US tariffs, once again raising trade war concerns between these two countries. Meanwhile, downside risks for oil prices continue to persist as OPEC+ plans to revive production in its upcoming meeting scheduled for next week.”
“US Energy Secretary Chris Wright has said that the country will continue to refill its Strategic Petroleum Reserve as current crude oil prices provide an attractive opportunity. The SPR stands at a little over 397m barrels. That’s up from a low of 347m barrels in 2023, but still well below the 656m barrels it stood at in mid-2020. Wright previously said it will take years to fully refill the SPR, requiring $20bn of funding. He further added that he is asking Congress for funding to help fill the reserve faster. Considering the SPR has a capacity of around 700m barrels, this assumes refilling the SPR would cost around $65/bbl.”
“Recent market reports suggest that several oil refineries across Spain were halted after the country was hit by a power failure on Monday. Moeve said that all its plants in the country had fully stopped working, while another site in Bilbao was also halted. Repsol SA, the majority owner of Petronor, which runs other plants across the country, said all of its refineries were affected. It is reported that sharp fluctuations in power resulted in a network outage across Spain, marking Europe’s worst blackout in years. As per market estimates, Spain operates a significant oil refining system that processed about 1.3m b/d on average last year. Officials are continuing to determine the reason for the outage, while backup plans have already been put in place by utilities.”