Crude oil futures lost ground for the week alongside rising doubts about the outlook for global demand, sparked largely by fears the Federal Reserve will push for more aggressive interest rate hikes.
In testimony before the U.S. Senate on Tuesday, Fed Chair Jerome Powell warned interest rates would need to rise further than previously thought to get inflation under control.
“The chances of a recession – and therefore lower oil demand – increased, causing a drop in the price of the barrel as traders start to price in the economic contraction, that may result from the tightening of monetary policy” in the U.S., ActivTrades analyst Ricardo Evangelista told MarketWatch.
Meanwhile, China’s imports fell 10.2% during the first two months of the year, double the consensus decline expected by economists.
Front-month Nymex crude oil (CL1:COM) for April delivery settled -3.7% to $76.68/bbl this week, down five ofthe past seven weeks, and May Brent crude (CO1:COM) closed -3.5% to $82.78/bbl.
Meanwhile, Nymex natural gas (NG1:COM) for April delivery finished -19.2% to $2.43/MMBtu, plunging 47.5% so far this year.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (DBO), (SCO), (USL), (DRIP), (GUSH), (USOI), (NRGU), (UNG), (UGAZF), (BOIL), (KOLD), (UNL), (FCG)
Late Friday, the operator of the Trans Mountain pipeline project in Canada said construction costs have soared to C$30.9B (US$22.3B), ~4x the estimated C$7.7B cost when Canada’s government bought the project from Kinder Morgan (KMI) in May 2018.
Canada paid C$4.5B for the 710-mile pipeline, which Kinder Morgan sold due to political uncertainty over the project’s completion.
Trans Mountain Corp., which operates the project on behalf of the Canadian government, cited a range of factors for the higher costs including inflation, supply chain challenges, floods in British Columbia, unexpected archaeological discoveries and difficult terrain.
The new pipeline, which will expand capacity to 890K bbl/day, is 80% complete and expected to be in operation during next year’s Q1 after reaching mechanical completion by year-end 2023, the operator said.
The Energy Select Sector SPDR ETF (XLE) closed -5.3% for the week.
Top 5 gainers in energy and natural resources during the past 5 days: (VST) +14.5%, (PPSI) +7.2%, (ENLT) +7.2%, (TPIC) +6.2%, (DKL) +4%.
Top 10 decliners in energy and natural resources during the past 5 days: (NYSE:NINE) -35.1%, (AMTX) -30.2%, (ICD) -23.7%, (VTNR) -23%, (SLI) -22.7%, (NM) -22.2%, (AMPY) -20.7%, (AMLI) -20.6%, (HPK) -20.6%, (SBOW) -19.5%.