Oil Slips Over 1% on Bets that Crude Supply Growth Will Exceed Demand

The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant/File Photo
The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant/File Photo
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Oil Slips Over 1% on Bets that Crude Supply Growth Will Exceed Demand

The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant/File Photo
The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant/File Photo

Oil prices fell for a third day straight on Wednesday on growing expectations that supply growth will outpace demand growth next year, even though the Omicron coronavirus variant is not seen curbing mobility as sharply as earlier COVID-19 variants.

US West Texas Intermediate (WTI) crude futures fell $1.05, or 1.5%, to $69.68 a barrel by 0734 GMT, after losing 56 cents in the previous session.

Brent crude futures fell 91 cents, or 1.2%, to $72.79 a barrel, after losing 69 cents on Tuesday.

Brent's prompt monthly spread was unchanged at 7 cents after flipping into contango briefly on Tuesday.

The International Energy Agency (IEA) on Tuesday said a surge in COVID-19 cases with the emergence of the Omicron variant will dent global demand for oil at the same time that crude output is set to increase, especially in the United States, with supply set to exceed demand through at least the end of next year.

In contrast, the Organization of the Petroleum Exporting (OPEC) on Monday raised its world oil demand forecast for the first quarter of 2022.

"The IEA's bearish view on the market was in stark contrast to OPEC's more positive view when it released its monthly outlook earlier this week. The divide suggests volatility is likely to remain high in the short term," ANZ commodity analysts said in a note.

Energy consultancy FGE said it has a more optimistic outlook than the IEA as the consultancy expects a smaller surplus of 400,000 barrels per day, based on a comparatively lower demand risk from Omicron, against IEA's forecast of 1.7 million bpd in the first quarter.

Also weighing on the market is a firming US dollar, which makes commodities priced in the greenback more expensive for other countries, Reuters reported. Markets are awaiting the outcome of a key US Federal Reserve policy meeting on Wednesday for signs of when the central bank may raise interest rates.

In another bearish indicator, industry data showed that US crude inventories last week did not decline as much as expected. American Petroleum Institute data showed US crude stocks fell by 815,000 barrels in the week ended Dec. 10, according to market sources, compared with a 2.1 million barrel drop that 10 analysts polled by Reuters had expected.

However, distillate stocks fell by 1 million barrels, compared with analysts' forecasts for an increase of 700,000 barrels, and gasoline stocks rose by 426,000 barrels, which was a smaller build than expected. Weekly data from the US Energy Information Administration is due later on Wednesday.



Oman LNG Delivers First Shipment to Shell

A glimpse of the first LNG shipment delivery to Shell at the industrial complex in Sur, Oman (Oman News Agency)
A glimpse of the first LNG shipment delivery to Shell at the industrial complex in Sur, Oman (Oman News Agency)
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Oman LNG Delivers First Shipment to Shell

A glimpse of the first LNG shipment delivery to Shell at the industrial complex in Sur, Oman (Oman News Agency)
A glimpse of the first LNG shipment delivery to Shell at the industrial complex in Sur, Oman (Oman News Agency)

Oman LNG on Tuesday announced the successful loading of its first liquefied natural gas (LNG) cargo to Shell under its new long-term agreements, marking a significant milestone in the company’s strategy to expand its global market reach and reinforce Oman’s position as a leading LNG supplier.
According to Oman News Agency, the ceremonial event took place at Oman LNG’s state-of-the-art facility in Sur, under the auspices of Salim al Aufi, Minister of Energy and Minerals, alongside senior officials from Oman LNG and Shell.
Aufi, in his remarks, emphasized the importance of this milestone, saying, “Today’s shipment is not merely a delivery but a testament to Oman’s commitment to energy security, global collaboration, and sustainable economic growth. It also reflects the strong partnership between Oman LNG and Shell, built on mutual trust and a shared vision.”

Shell, as the largest offtaker under these new agreements, plays a pivotal role in Oman LNG’s strategic plans for sustained growth and market expansion.

Oman LNG’s CEO, Hamad al Naamany, highlighted the significance of this shipment, saying, “We are embarking on a 10-year concession extension with market leaders in LNG and energy. Our growth is aligned with Oman’s vision and adapted to the evolving global energy market demands. Our partnership with Shell continues to thrive, contributing to Oman’s economic diversification goals.”