The oil market awaits the impact of high inflation and interest rates on fuel demand

Crude oil prices ended the week’s trading on a decline, but recorded weekly gains of about 3.4 percent, and the declines are due to the control of fears on the oil market that high inflation and interest rates will affect economic growth and demand for fuel.
And the Organization of Petroleum Exporting Countries, OPEC, cut its forecast for the growth of demand for crude oil for the current year to 3.1 million barrels per day, instead of 3.36 million barrels per day, by 300,000 barrels.
In this context, the international oil “Reg Zone” report stated that crude oil prices fell at the end of last week, but they still recorded weekly gains, as traders weigh the prospects of rising demand this winter against the possibility of the return of supplies from some countries.
The report indicated that crude oil prices fluctuated with a slowdown in inflation, which may ease the pace of interest rate hikes by the Federal Reserve, which supported commodity prices on a large scale, indicating that demand figures in the United States are heading for the better.
He explained that despite the rise in prices this week, concerns intensified about the possibility of faltering global economic growth.
In a related context, the international oil price “Oil Price” report indicated that crude oil prices declined at the end of the week’s trading, giving up some gains, as traders remained cautious about crude oil purchases again.
He explained that the last week was very turbulent in the oil markets, as it started with a pervasive feeling of demand gloom, however, it recorded weekly gains in the end, backed in large part by steady US inflation data and pipeline supply interruptions in Europe.
The report pointed out that energy markets increased with tension with Germany’s refusal to revive Nord Stream 2, as the German government objected to the idea of operating the pipeline with a capacity of 55 billion cubic meters annually to increase gas flows, despite international warnings of reducing consumption by 20 percent within months. Winter with Berlin confirming its support for the sanctions.
He noted that US refineries will continue to absorb the volumes of the released strategic petroleum reserve, as a total of nine companies will buy 20 million barrels of US crude oil that has already been released from the strategic reserve.
He warned that Nigeria’s reserve capacity is witnessing a significant decline, as agencies have reduced sustainable oil production levels in Nigeria by about 200,000 barrels per day to 1.3 million barrels per day, which reflects the gradual low production rates in the African country and the lack of progress in combating sabotage and oil theft .
The report stated that crude oil gains dissipated after renewed fears of a recession that weakened the improved demand expectations by the International Energy Agency, stressing that the sharp decline in crude oil prices at the end of last week came amid fears that high inflation and interest rates will affect economic growth and demand on the fuel.
He pointed to the change in market sentiment after weaker-than-expected US inflation data significantly reduced the chances of an interest rate hike by the Federal Reserve in September, and the International Energy Agency issued a report monitoring a case of high demand.
He added that the unexpected decline in gasoline stocks was another supportive catalyst, while the sharp rise in crude oil stocks and the possibility of an Iranian nuclear deal affected prices.
The report highlighted the US Energy Information Administration’s assertion that US crude oil inventories rose 5.5 million barrels in the last week, which is more than the expected increase of 100,000 barrels. To be the height of the summer driving season.
On the other hand, with regard to crude oil prices at the end of last week, oil prices fell upon settlement of Friday’s trading, but recorded weekly gains.
Upon settlement of transactions, Brent crude futures fell by 1.5 percent, to $98.15 a barrel, but recorded weekly gains of about 3.4 percent, while Nymex crude futures fell by 2.4 percent, at $92.09, recording weekly gains of about 3.7 percent.
The market is dominated by fears that rising inflation and interest rates will affect economic growth and fuel demand. A Louisiana port official said crews are expected to quickly replace a damaged section of the pipeline. These steps are expected to lead to the resumption of production on seven US offshore oil platforms in the Gulf of Mexico.
And the monthly OPEC report showed on Thursday that it cut the forecast for global oil demand growth in 2022 to 3.1 million barrels per day, from 3.36 million barrels per day, by 300,000 barrels.
On the other hand, the American company “Baker Hughes” weekly report on drilling activities stated that the total number of active drilling rigs in the United States decreased by 1 this week, which is the second decline in several weeks.
The report pointed out that the total number of rigs decreased to 763 this week – 262 rigs higher than the number of rigs this time in 2021. Oil rigs in the United States increased by three this week to 601, the number of gas rigs decreased by 1 to 160, and various rigs decreased by three.
The report indicated that the number of rigs in the Permian basin decreased from 1 to 346 this week, while rigs in Eagle Ford remained unchanged at 72, while oil and gas rigs in the Permian recorded a hundred higher than it was this time last year.
The report indicated that crude oil production in the United States rose by 100,000 barrels per day to an average of 12.2 million barrels per day in the week ending August 5, according to the latest estimates of the Energy Information Administration.