Oil Falls as US Rate Hike Expectations Offset Tight Supply Outlook

FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford//File Photo
FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford//File Photo
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Oil Falls as US Rate Hike Expectations Offset Tight Supply Outlook

FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford//File Photo
FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford//File Photo

Oil prices fell in early Asian trade on Thursday, after posting the largest fall in a month in the previous session, as US interest rate hike expectations offset the impact of drawdowns in US crude stockpiles.
Brent futures for November delivery were down 71 cents, or 0.76%, to $92.82 a barrel by 0608 GMT. US West Texas Intermediate crude (WTI) fell 70 cents, or 0.78%, to $88.96, the lowest since Sept. 14.
"The Fed kept rates unchanged at yesterday's FOMC meeting, as widely expected. However, it was still seen as a hawkish pause, which put some pressure on risk assets" such as oil, said ING analysts in a client note.
The US Federal Reserve maintained interest rates after its Federal Open Market Committee (FOMC) meeting, but stiffened its hawkish stance with a rate increase projected by year-end which could dampen economic growth and overall fuel demand, Reuters reported.
Fed policymakers still see the bank's benchmark overnight rate range peaking this year at 5.50% to 5.75%, a quarter of a percentage point above the current range.
The hawkish stance also led to the US dollar surging to its highest since early March, placing downside pressure on oil prices. A stronger dollar typically makes commodities such as oil more expensive for buyers using other currencies.
Energy markets reacted little to data from the US Energy Information Administration (EIA) on Wednesday showing crude inventories fell in line with expectations last week, with some analysts saying the decline was smaller than they expected.
"EIA data showed US stockpiles fell 2.14 million barrels last week, well short of the 5.25 million barrel drop reported by the American Petroleum Institute. The disappointing inventory drawdown gave impetus for traders to lock in profits following the 10% gain since the start of the month," ANZ analysts said in a note.
The stock draw was mainly driven by strong oil exports, while gasoline and diesel inventories were drawn down as refiners began annual autumn maintenance, the EIA said in a weekly report.
However, price falls were limited by continuous concern on tight supply globally entering the fourth quarter, with crude stocks at Cushing - the WTI delivery hub - at their lowest since July 2022 and production cuts continuing by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+.



Russia’s First Ice-Class LNG Carrier Enters Sea Trials, Data Shows

A concrete gravity-based structure (GBS) of Arctic LNG 2 joint venture is seen under construction in a dry dock of the LNG Construction center near the settlement of Belokamenka, Murmansk region, Russia July 26, 2022. (Reuters)
A concrete gravity-based structure (GBS) of Arctic LNG 2 joint venture is seen under construction in a dry dock of the LNG Construction center near the settlement of Belokamenka, Murmansk region, Russia July 26, 2022. (Reuters)
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Russia’s First Ice-Class LNG Carrier Enters Sea Trials, Data Shows

A concrete gravity-based structure (GBS) of Arctic LNG 2 joint venture is seen under construction in a dry dock of the LNG Construction center near the settlement of Belokamenka, Murmansk region, Russia July 26, 2022. (Reuters)
A concrete gravity-based structure (GBS) of Arctic LNG 2 joint venture is seen under construction in a dry dock of the LNG Construction center near the settlement of Belokamenka, Murmansk region, Russia July 26, 2022. (Reuters)

The first Russian-built ice-class liquefied natural gas (LNG) carrier has entered sea trials, LSEG data showed on Friday, as part of Russia's efforts to raise global LNG market share despite US sanctions.

The tanker, named Alexey Kosygin after a Soviet statesman, was built at the Zvezda shipyard and is due to join the fleet of vessels for Russia's new Arctic LNG 2 plant, which has been delayed because of the US sanctions over the conflict in Ukraine.

The US Treasury has also placed sanctions on the new vessel, which Russia's leading tanker group Sovcomflot ordered to be built at Zvezda, Russia's most advanced shipbuilding yard. LSEG ship-tracking data shows it is anchored near the Pacific port of Vladivostok.

Sovcomflot has not replied to a request for comment.

Novatek, which owns 60% of Arctic LNG 2, has said 15 Arc7 ice-class tankers that are able to cut through two meter (6.5 ft) thick ice to transport LNG from Arctic projects, will be built at Zvezda shipyard.

According to a source familiar with the matter, Novatek shut down commercial operations at the first and only operational train of its Arctic LNG 2 project in October with no plans to restart it during winter.

Ice-class tankers usually have double hulls - strengthened structures to withstand the pressure of ice - and reinforced propellers.

So far, only three suitable gas tankers have been built for Arctic LNG 2, according to public information: the Alexey Kosygin, Pyotr Stolypin and Sergei Witte vessels.

Six more Arc7 tankers were due to be built by Hanwha Ocean, formerly Daewoo Shipbuilding & Marine Engineering, including three for Sovcomflot and three for Japan's Mitsui O.S.K. Lines.

However, the three tankers ordered by Sovcomflot were cancelled due to the sanctions against Russia, Hanwha said last year in regulatory filings.