Shell CEO says volatility will last until 2023: File Image/Pixabay
With the WE Thursday the economy said it was now in a technical recession, it was no surprise that concerns about demand cause a fall in oil prices – and they have fallen, but only for the US benchmark.
West Texas Intermediate fell 84 cents settle at $96.42 per barrel and Brent earned 52 cents settle at $107.14 per barrel after the US economy was reported to have contracted for a second straight quarter; however, the decline in WTI prices was mitigated to some extent by reports that crude inventories fell the most since late May, per 4.5 million barrels.
As in previous sessions, fears of demand destruction appear to be equally balanced by concerns about tight supply, and the latter sentiment was voiced on Thursday by Phil Flynnsenior market analyst at Price Futures Group Inc..; he said: “When you look at the recession numbers, if there’s a downturn at this point, it’s a minor downturn; if you look at the oil demand and supply numbers, we’re well below average on supply and demand is holding up better than expected.”
There are more pros than cons when it comes to the price of oil
Ben van Beurden, CEO, Shell
Also, Ben van BeurdenCEO of Shell, Told Bloomberg TV said “there are more upsides than downsides when it comes to the price of oil: demand has yet to fully recover and supply is definitely tight.”
He added that supply will be limited and prices will remain volatile “not only for the rest of this year, but into next year”.
Indeed, the reduction in oil flows to Europe of Russia exacerbated market tensions and caused the spread between WTI and Brent to widen this week.
In other oil-related news on Thursday, not everyone is spooked by high oil prices: Cenovus Energy Inc. said inflation has been manageable for the company so far, and that it could spend hundreds of millions of dollars more this year than originally planned for an acquisition in alberta and also to relaunch a project offshore Newfoundland.
The Calgaryat home had a net profit of $2.4 billion in the second quarter compared to $224 million one year earlier.
Stewart Glickmanenergy analyst at CFRA, Told media that “this quarter is going to be an explosion” for Exxon Mobil, Chevronand other energy giants, and he added that “they have, I would say, a few tailwinds at their back: the first one is certainly energy prices.
“But it’s both oil and natural gas: crude oil, US WTI, averaged near $110 in the quarter: it’s over 65 percent Year after year. … natural gas, it was approx. $7.50 per million BTUs [and] it was under $3 one year ago.”