Crude oil sell-off a bit overdone – Edge-Forex
Following a spike to near $123 per barrel last week due to a variety of global factors, crude oil prices fell by as much as 6%, or $11 to $112 per barrel, on June 17. This was a sharp reversal from the steep ascent that followed Russia’s invasion of Ukraine, with global travel opening up and services reviving.
The correction was primarily caused by two factors: new figures for Libyan oil being confirmed at 700,000 barrels per day (bpd) rather than the previously expected 100,000 bpd, and US market turmoil caused by a sell-off in broader risk assets.
The Libyan oil minister confirmed this as well, and while the number is still below the 1.1-1.2 million bpd that Libya is capable of producing, compared to the 100,000 bpd production that the market had assumed, this was somewhat bearish news.”
Not only in the United States, but globally, demand is still strong. There is still some momentum there from pent-up demand.”
However, in the midst of the COVID-19 pandemic, the bulk of demand has shifted from products to services such as travel, leisure, hospitality, and industries, among others.
It is also the peak season for travel in the Western Hemisphere, with people returning to the roads and skies in droves. There is some momentum, but suppliers remain in the driver’s seat.
The sell-off on Friday was “a little overdone,” and prices could soon be “ticking back up again.”
Since the Ukraine war, crude prices have remained in the $100-120 per barrel range and are expected to remain there.
