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commented on a stock11/18/2022 11:18

$RH PetroGas(T13.SG)$$Rex Intl(5WH.SG)$$Dyna-Mac(NO4.SG)$$Crude Oil Fu...

$RH PetroGas(T13.SG)$$Rex Intl(5WH.SG)$$Dyna-Mac(NO4.SG)$$Crude Oil Futures Main(MAR3)(CLmain.US)$
Oil nosedived on Thu on China Covid news and a significant drop in U.S. manufacturing activity. Brent settled down 3.3% at USD89.78 while WTI for Dec delivery plunged 4.6% to USD81.64.
Currently, Brent is up 1.05% at USD82.45.
China's new case total rose above 23,000, which is the highest level since Apr and is approaching their record high. Fears are growing that the spread won't ease soon as cases have spread across the populous Chinese regions of Guangzhou and Chongqing.
In the U.S., a gauge of manufacturing activity in the mid-Atlantic region fell unexpectedly this month to its lowest level since 2011 as firms reported continued softness in new orders and a weak outlook.
"Oil prices are getting punished as crude demand concerns show no signs of easing," said Ed Moya, analyst at OANDA. "The world's two largest economies are struggling here as China battles Covid and the US is seeing a significant drop with manufacturing activity."
"Some of the geopolitical risk that sent oil higher earlier this week is coming off the table," Moya added. "With no immediate escalation in the war in Ukraine, we could see energy traders fixate on the Russian crude price cap that takes hold early next month."
Some analysts said that the EU's ban on seaborne imports of Russian oil, along with the G7's plan to cap prices of oil from Russia early next month might not result in a lasting rally for crude.
"In isolation, the sanctions on Russia should be bullish for prices," Matt Smith, lead oil analystm for Americas at Kpler, said in a special focus report carried by MarketWatch. "However, they may have a limited effect, as Russian barrels get "rerouted and not taken off the market," while a price cap still has so much uncertainty surrounding it that its impact may be "muted due to workarounds or may simply be ineffective."
Prices may see a rise in the few weeks following the Dec. 5 implementation of the ban and price cap, Vikas Dwivedi, global oil and gas strategist at Macquarie Group, said.
However, following an adjustment period that may last three to six weeks to find new sources of shipping, capital, and insurance, oil may give back premiums that it accrued from the implementation date, he says.
The International Energy Agency estimated that 1.1 million barrels a day of Russia oil exports would be halted by the EU oil ban.
There will "not be a penalty from a price cap perspective on barrels that are loaded before Dec. 5 but discharged afterward," says Kpler's Smith, who notes that the "ultimate deadline" for delivery is Jan. 19.
With just over a couple of weeks to go, the price cap hasn't been set yet. It may be in the USD65-a-barrel range, says Smith - which would represent a bigger discount than there is currently for Urals, the most common export grade of oil from Russia, versus the global crude benchmark.
The G-7's rationale is to have a fixed number for the price cap, which will "tame the oil market" and limit the amount of profit that Russian President Vladimir Putin can feed to his war machine, says Samir Madani, co-founder of U.S.-based vessel-tracking research firm TankerTrackers.com.
What's likely to happen, however, is the market will find in the days and weeks thereafter that India and Turkey have rapidly slowed imports of Middle East oil in favor of more Russian oil, Madani says, noting that Turkey has already quadrupled imports from Russia year on year, based on the Aug-through-Oct average. Madani says that Russia's non-G-7 clients are likely to "import cheap Russian crude, refine it, and sell it at a large profit margin to the G-7." That probably won't get much pushback, given that the situation still means Putin won't receive his profit, and allows refined products to enter the market, he says.
All in all, Madani expects that in the initial chaos of the ban and price cap on Russian oil, prices for the commodity will end up in the "three-digit range" by the end of the year.
Then, once the non-G-7 countries have "sorted out their logistics," oil is likely to see a fallback in prices, Madani added.
A substained fall in oil prices may see crude falling to Sep 2022 lows.
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