(London) Crude prices faltered on Wednesday, weighed down by disappointing PMI economic indicators in many consumer countries, before the weekly publication of the state of commercial oil reserves in the United States, while gas retreated.
Around 7:45 a.m. (Eastern time), a barrel of Brent from the North Sea, for delivery in October, lost 1.59% to 82.69 dollars.
Its American equivalent, the barrel of West Texas Intermediate (WTI), for delivery the same month, of which it is the first day of use as a benchmark contract, dropped 1.63% to 78.34 dollars.
In France, Germany in the euro zone, but also in the United Kingdom, the PMI indicators are all “in contraction and figures below expectations will again sound warnings of a drop in oil demand”, says John Evans , analyst at PVM Energy.
The downturn in private sector activity in the euro zone indeed worsened in August, with the poor health of the manufacturing industry now affecting service companies. In the United Kingdom, the economy suffered its strongest contraction in August since the beginning of 2021, when the country was in confinement.
“Rising concerns about the state of the Chinese economy, combined with expectations of further interest rate hikes in the United States” are also weighing on prices, analysts at Energi Danmark note.
Investors are also awaiting release of the U.S. Commercial Weekly Inventory Statement from the U.S. Energy Information Agency (EIA) for the week ended August 18.
The industry federation, the American Petroleum Institute (API), estimated on Tuesday that crude inventories fell by around 2.4 million barrels last week, but that those of gasoline rose by 1. 9 million barrels. However, API data is considered less reliable than EIA data.
Analysts are expecting a 3 million barrel drop in commercial crude reserves, and a 481,000 barrel drop in gasoline, according to the consensus median compiled by Bloomberg.
On the natural gas side, the Dutch TTF futures contract, considered the European benchmark, fell by more than 8%, to 39.35 euros per megawatt hour (MWh), shortly after having slipped to 35,025 euros.
On Wednesday, the giant Woodside is meeting with the unions of gas plant workers for a negotiation meeting on wage levels. This weekend, union members at Woodside’s North West Shelf project voted unanimously to go on strike if their demands were not met.
The affected Australian facilities alone supply more than 10% of the world’s LNG supply each month.
If “the market appears to be performing a downward correction” on Wednesday, the situation “could change quickly” depending on the outcome of the meeting, Energi Danmark analysts say.
Natural gas is indeed still up more than 60% compared to its floor price in mid-July, when it was below 25 euros per MWh.
