Brent Crude Oil Prices on a Decline
According to Reuters, Crude Oil prices experienced a decline on 31st February. This was driven by a combination of factors including subdued economic activity in China, unexpected growth in United States crude inventories, and broader geopolitical tensions.
March Brent Crude Oil Futures price closed at $81.71 a barrel, making a 1.4% decrease, while April Brent Crude Oil Futures Contract settled down 2.3% at $80.55. Similarly, U.S. West Texas Intermediate WTI Crude Oil futures saw a 2.5% drop, settling at $75.85 per barrel.
The session witnessed both benchmarks falling by more than $2 a barrel, reflecting the day's bearish trend.
Causes of Struggling Crude Oil Prices
The fluctuating dynamics of global crude oil prices are intricately influenced by a myriad of factors that extend beyond mere supply and demand. According to Reuters, the struggling crude oil prices can be attributed to a couple of factors.
Chinese Economic Struggles
China, the world's second-largest economy, saw its manufacturing activity contract for the fourth consecutive month in January. This decline underscores broader challenges faced by the Chinese economy, amplified by the recent liquidation of troubled property developer China Evergrande.
The real estate sector, a key player constituting a quarter of China's GDP, is undergoing significant turmoil. Major forecasters, including the Organization of the Petroleum Exporting Countries (OPEC), are closely watching as oil demand growth in 2024 is expected to be primarily driven by Chinese consumption.
U.S. Factors
Contributing to the downward pressure on oil prices, United States Energy Information Administration data revealed a surprising increase of 1.2 million barrels in weekly crude oil inventories, contrary to analysts' expectations of a 217,000-barrel draw.
United States domestic oil production rebounded to 13 million barrels per day (bpd) in the previous week, recovering from a temporary shutdown of nearly 1 million bpd in capacity caused by the cold weather earlier last month.
Meanwhile, Oil refineries faced challenges with crude runs falling to their lowest level since January 2023 due to adverse weather conditions. This caused refinery utilization rates to drop to 82.9%, as reported by the EIA.
Refiners are cautious about rushing back to levels above 90%, according to Bob Yawger, director of energy futures at Mizuho.
Geopolitical Tensions
The ongoing conflict in the Red Sea, involving the Israel-Hamas war and tensions with Iran-aligned Houthi militants, has disrupted oil and natural gas tanker shipping. This situation has not only driven up delivery costs but is also starting to affect oil supplies.
Geopolitical risks, including a recent deadly drone attack on U.S. troops near the Jordan-Syria border, have added to the complexity. Despite these challenges, a Reuters poll suggests that record production in the West and slow economic growth will likely keep a lid on prices, limiting any geopolitical risk premium.
OPEC's Response
On the supply side, OPEC oil output in January experienced the most significant monthly drop since July. A Reuters survey reported a reduction of 410,000 barrels per day (bpd) compared to December, with Angola excluded from December's total as it left the OPEC alliance.
As geopolitical uncertainties continue to influence oil markets, the intricate dance between supply, demand, and geopolitical factors remains a crucial determinant of future oil prices. Investors and analysts are closely monitoring developments, recognizing the delicate balance that dictates the ebb and flow of the global oil market.
Trading Brent Crude Oil Futures
Due to the widespread use of Brent Crude Oil and its importance to the global market, Brent Crude Oil Futures is one of the most traded commodities futures in the world.
There are several exchanges that offer different types of Crude Oil Futures Contracts and Brent Crude Options and Futures. Traders can trade Fuel Oil Futures, Crude Oil Futures and Brent Oil Futures under Shanghai International Energy Exchange (INE), ICE Futures Singapore (ICE SG), ICE Futures Europe (IPE), and New York Mercantile Exchange (NYMEX) through Orient Futures Singapore.
Apart from Brent Crude Oil Futures, Orient Futures Singapore also offer other forms of commodities futures such as Soybean futures, Peanut Kernel Futures, and the latest Containerized Freight Index Futures.
Since these commodities futures are available on different exchanges, traders can look to utilizing it for cross-arbitrage trading, such as refined copper arbitrage trading and rubber cross-arbitrage trading.
Traders would need to go through an Overseas Intermediary like Orient Futures International Singapore to trade crude oil futures from INE through either the QFI China Scheme or Internationalized Products from China.
Click here to know more about Brent Crude Oil Futures Contract, Brent Crude Oil Options and Brent Crude Oil Futures Symbol.
Intercontinental Exchange Europe (IPE) Brent Crude Oil Futures Contract Specifications
The Brent Crude Futures Contracts has the following specifications:
The contract size for Brent Crude Futures Contract has a minimum price fluctuation of USD $0.01 per barrel.
The last trading day is the last Business Day of the second month preceding the relevant contract month.
Contract months are for January, March, May, July, August, September, and November.
ICE Europe Trading Hours are from Monday to Friday, at these trading hours:
8:00 PM – 6:00 PM (New York Time)
Brent Crude Oil Futures symbol: B
ICE Futures SG (ICE SG) Mini Brent Crude Futures (100BL) Contract Specifications
For traders looking to trade smaller futures contracts for Brent Crude Oil, they may look to trade ICE SG Mini Brent Crude Futures.
The ICE SG Mini Brent Crude Futures Contracts has the following specifications:
The contract size for Mini Brent Crude Futures Contract has a minimum price fluctuation of USD $0.01 per barrel.
The last trading day is the last Business Day of the second month preceding the relevant contract month.
Contract months are for January, March, May, July, August, September, and November.
ICE SG Trading Hours are from Monday to Friday, at these trading hours:
09:00 AM – 07:00 AM (Singapore Time)
Mini Brent Crude symbol: BM
Start Trading With Orient Futures Singapore
Being an Overseas Intermediary of Shanghai International Energy Exchange (INE), Dalian Commodity Exchange (DCE), and Zhengzhou Commodity Exchange (ZCE), when foreign clients participate in internationalised futures contracts in these Chinese markets with us, they have direct access to trading, clearing, and settlement. Our parent company, Shanghai Orient Futures, is the largest broker in terms of aggregated volume across the five regulated exchanges in China.
Orient Futures Singapore also currently holds memberships at the Singapore Exchange (SGX), Asia Pacific Exchange (APEX), and ICE Futures Singapore (ICE SG). Starting August 2023, corporate clients can also gain access to the B3 Exchange through us.
We provide bespoke services to our professional clients, tailored to their corporate and individual needs. Our team will be there for you 24 hours on trading days to provide a one-stop portal for all your trades, with simple processes and an intuitive user interface that has low or near-to-zero latency.
