Oil

Oil prices head for weekly drop on global economic slowdown worries

Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford

Register now for FREE unlimited access to Reuters.com

  • U.S. crude stocks fall by 7.1 mln bbl, far more than expected
  • U.S. oil refiners aim to run full-bore, spurning recession fears
  • OPEC chief says blame policymakers, lawmakers for price rises

SINGAPORE, Aug 19 (Reuters) – Oil prices slipped on Friday after two days of gains, as market participants weighed worries about a global economic slowdown, which would dampen fuel demand, against expectations of tighter supplies toward year-end.

Brent crude futures fell 68 cents, or 0.7%, to $95.91 a barrel by 0658 GMT after settling 3.1% higher on Thursday. U.S. West Texas Intermediate crude was at $89.81 a barrel, down 69 cents, or 0.8%, following a 2.7% increase in the previous session.

Both benchmark contracts were headed for weekly losses of more than 2%.

Register now for FREE unlimited access to Reuters.com

While bullish U.S. weekly data bolstered optimism for improved fuel demand for the near-term, lingering recession fears and a possible increase in output by OPEC+ will likely limit oil price’s upside, said Satoru Yoshida, a commodity analyst with Rakuten Securities.

U.S. crude inventories fell sharply as the nation exported a record 5 million barrels of oil a day in the most recent week, with oil companies finding heavy demand from European nations looking to replace crude from warring Russia.

Keeping crude supplies snug, U.S. oil refineries plan to keep running near full throttle this quarter, according to executives and estimates, as refiners set aside worries about recession and sliding retail prices to deliver more fuel. read more

The rise in U.S. fuel production could partly offset lower oil products exports from China this year as Beijing prioritises the local market to curb domestic fuel inflation. read more

On supplies, Haitham Al Ghais, new secretary general of the Organization of the Petroleum Exporting Countries, told Reuters that policymakers, lawmakers and insufficient oil and gas sector investments are to blame for high energy prices, not his group. read more

The group together with allies such as Russia, known as OPEC+, are due to meet on Sept. 5 to adjust production. OPEC is keen to ensure Russia remains part of the OPEC+ oil production deal after 2022, Al Ghais said. read more

In a sign of improving supplies, the price gap between prompt and second-month Brent futures narrowed about $5 a barrel from the end of July.

Record U.S. crude exports, the resumption of Libya’s production and sustained exports from Russia and Iran have eased global supply tightness ahead of peak refinery maintenance. read more

Still, supplies could tighten again when European buyers start seeking alternative supplies to replace Russian oil ahead of European Union sanctions which take effect from Dec. 5.

“We calculate the EU will need to replace 1.2 million barrels per day of seaborne Russian crude imports with crude from other regions,” consultancy FGE said in a note.

Register now for FREE unlimited access to Reuters.com

Reporting by Florence Tan in Singapore and Yuka Obayashi in Tokyo; Editing by Christopher Cushing and Kenneth Maxwell

Our Standards: The Thomson Reuters Trust Principles.

Source link

Leave a Comment