Uncertainty casts a shadow over crude prospects

Oil production growth in major US states has slowed and inflation, supply chain problems and economic uncertainty have led executives to moderate their expectations, the latest Bank of America survey showed. Dallas Federal Reserve.

According to this month’s survey of executives from 152 energy companies in Texas, New Mexico and Louisiana, business activity in the oil and gas sector fell to 30.3 in the fourth quarter, from 46 in the third.

The index had stood at 57.7 in the second quarter of this year, the highest reading in the survey’s history.

US shale oil growth has also shown signs of slowing.

According to the US Energy Information Administration (EIA), output from the Permian basin, the largest in the United States, is expected to rise by 37,000 barrels a day next month, the smallest rise in seven months.

32% of executives surveyed said cost inflation and supply chain bottlenecks were the main drags on oil and gas production growth, while 27% cited maturing fields .

“We are preparing for further cost increases in 2023. This comes against a backdrop of uncertainty over raw material prices and fears of demand destruction due to the recession,” said an executive, who was not named.

Businesses reported their eighth consecutive quarter of rising costs, though the pace slowed to 61.8 in the fourth quarter, from 83.9 in the prior quarter.

Overall, executives surveyed were less optimistic about the future, with the business outlook index slipping 20 points to 13.1, below the series average.

For its part, inventories of crude oil and distillates in the United States rose unexpectedly last week, while those of gasoline fell, the Energy Information Administration (EIA) reported on Thursday.

Crude inventories rose by 718,000 barrels in the week ended December 23 to 419 million barrels, against expectations of analysts in a Reuters poll who expected a drop of 1.5 million barrels.

Crude consumption at refineries increased by 173,000 barrels a day last week, according to the EIA, while refinery utilization rates grew 1.1 percentage points on the week.

Net imports of US crude rose by 1.33 million barrels a day, according to the EIA.

Crude prices continue to fall

Oil prices fell for a second straight session on Thursday on an uncertain demand outlook, as more countries considered restrictions on Chinese travelers due to the spread of Covid-19 infections in the top oil-importing nation.

The Chinese government is rolling back pandemic restrictions, but a surge in infections is prompting stricter travel rules for Chinese visitors in some countries.

Brent futures for February delivery fell a dollar to close at $82.26, down 1.2%. US West Texas Intermediate crude futures settled at $78.40 a barrel, down 56 cents, or 0.7 percent. The Mexican export mix fell 1.41% to $67.32 per barrel.

Britain is considering whether to impose restrictions on people arriving from China.