Oil price nudges higher, but ample global production weighs(Update)


  • Business
  • Monday, 28 Jan 2019

Brent crude futuresdipped 20 cents, or 0.3 percent, to settle at $72.61 a barrel, while U.S. West Texas Intermediate (WTI) crude declined 43 cents to settle at $67.20 a barrel, with a 0.7 percent loss. (Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma. - Reuters filepic)

SYDNEY: Oil prices steadied on Tuesday, edging up from a near two-week low in the previous session when prices fell around 3 percent on fears of supply growth and a global economic slowdown.

U.S. West Texas Intermediate (WTI) crude futures were at $52.07 (39.56 pounds)per barrel, up 8 cents from their last settlement. WTI futures closed down 3.2 percent on Monday when prices touched $51.33 a barrel - the lowest since Jan. 17.

International Brent crude oil futures had yet to trade, after closing down 2.8 percent in the previous session when prices hit a low of $59.49 a barrel - the lowest since Jan. 15.

"Rising supplies continue to put downward pressure on crude prices despite the efforts of the Organization of the Petroleum Exporting Countries (OPEC) and other major producers to limit production," said Alfonso Esparza, senior market analyst, OANDA.

U.S. drillers added 10 oil rigs last week, according to energy services firm Baker Hughes on Friday, in another sign of the expanding record U.S. crude production that has soured market sentiment. - Reuters 

Earlier report:

Oil price falls 3% on rising US production, economic slowdown fears

NEW YORK: Oil fell about 3 percent on Monday, its biggest one-day percentage drop in a month, after an increase in U.S. crude drilling pointed to further supply growth amid continuing concerns about a global economic slowdown.

Brent crude oil futures sank $1.71, or 2.8 percent, to settle at $59.93 a barrel, while U.S. West Texas Intermediate crude slumped $1.70, or 3.2 percent, to settle at $51.99 a barrel.

The last time both crude benchmarks saw bigger daily percentage drops was on Dec. 27.

"We're seeing oil prices really start to break down here," said Phillip Streible, senior market strategist at RJO Futures in Chicago. "One of the factors that played (into prices) is the rising rig count that we saw on Friday."

U.S. drillers added 10 oil rigs last week, according to energy services firm Baker Hughes on Friday, in another sign of the expanding record U.S. crude production that has soured market sentiment.

GRAPHIC: U.S. oil production & drilling levels - https://tmsnrt.rs/2Tm4u4I

The trade war between Washington and Beijing weighed on futures as investor optimism waned that the two sides would soon end the months-long tariff fight that has damaged China's economy.

That, coupled with uncertainty about how long the U.S. government will stay open after Washington agreed to end a historic shutdown, dampened investor optimism, said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut.

"I think both those factors seem to have sparked fears about slowing demand growth, which have been one of the main bearish drivers in the market for a while," McGillian said.

Crude futures remain on course for their strongest monthly gains in more than two years following production cuts by the Organization of Petroleum Exporting Countries and its allies this month.

Brent has risen nearly 12 percent so far in January, which would be the largest monthly percentage increase since December 2016. WTI has risen more than 13 percent this month, the biggest jump since April 2016, when it surged almost 20 percent.

Investors have added to bets on a sustained rise in the oil price this month for the first time since September, according to data from the InterContinental Exchange.

Much of the demand outlook hinges on China and whether its refiners will continue to import crude at 2018's breakneck pace.

Industrial companies in China reported a second monthly fall in earnings in December, despite the government's efforts to support borrowing and investment. - Reuters

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