Oil Plummets for Its First Monthly Drop Since November

Oil Plummets for Its First Monthly Drop Since November

Bloomberg oil is headed for the first monthly decline since November as OPEC ministers prepare to meet to discuss the group's supply policy.

West Texas Intermediate futures fluctuated near $110 a barrel after closing almost 2% lower on Wednesday. The economic slowdown is escalating and central banks are aggressively raising interest rates to combat surging inflation, which has dented oil this month. That overshadowed the rapid tightening of energy markets.

OPEC is expected to rubber-stamp a modest increase in supply for August, but the group has struggled to meet its production targets this year. President Joe Biden is set to visit the Middle East next month as he seeks to tame surging fuel prices, and the US has repeatedly called for more pumping, and President Joe Biden is going to visit the Middle East next month.

US gasoline demand is showing signs of a slight decline just three weeks into the peak driving season, with near-record prices likely encouraging people to stay closer to home. The four-week moving average of gasoline supplied fell below 9 million barrels a day, or about 600,000 barrels less than typical seasonal levels, according to the Energy Information Administration.

Warren Patterson, the Singapore-based head of commodities strategy at ING Groep NV, said the higher price environment appears to be doing its job when it comes to demand. I am not expecting any surprises from the group, as for the OPEC. I think it will be a fairly quick meeting. Oil is still up around 45% this year as the global economic recovery coincided with increased trade flows from Russia after its invasion of Ukraine in late February. The US crude inventories at the key storage hub in Cushing, Oklahoma, have reached critically low levels as refineries produce as much fuel as possible, while the pull for barrels from overseas remains strong.

The world is going to be a turbulent period as tighter supplies of oil and liquefied natural gas exacerbate a global energy crunch, according to Shell Plc Chief Executive Officer Ben van Beurden in Singapore on Wednesday. Demand is still recovering and the spare capacity is very low, he said.

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