US crude posts 4% weekly loss, settling at $71.34, dragged down by market sell-off
Brent crude gave back early gains and turned lower Friday after a closely watched forecaster said world oil supply is adequate and the outlook for demand is weakening.
Meanwhile, U.S. crude pared gains but stayed in positive territory on a lift from Wall Street.
The monthly report by the International Energy Agency (IEA) on Friday weighed on crude markets. The IEA said the market looked “adequately supplied for now” and trimmed its forecasts for world oil demand growth this year and next.
“The weaker outlook has gotten a raised profile in the market, but there’s potential for a real supply crunch toward the end of this year,” said John Kilduff, a partner at Again Capital Management in New York. “The demand outlook is hurt right now because of the situation with the U.S. and China in particular.”
Brent crude futures fell 26 cents to $80 a barrel by 1:48 p.m. ET, having dropped by 5.6 percent over the previous two sessions.
U.S. West Texas Intermediate (WTI) crude futures ended Friday’s session up 37 cents at $71.34 a barrel, after falling 5.3 percent during the two-day sell-off.
Brent is on pace for a roughly 5 percent weekly drop, while WTI posted a 4-percent loss this week.
The monthly report by the International Energy Agency (IEA) on Friday said the market looked “adequately supplied for now” and trimmed its forecasts for world oil demand growth this year and next.
“This is due to a weaker economic outlook, trade concerns, higher oil prices and a revision to Chinese data,” said the IEA, which advises industrialized countries on energy policy.
The IEA report is the latest government assessment to predict weaker demand ahead and conclude that supply is adequate. The Organisation of the Petroleum Exporting Countries (OPEC) made a similar move on Thursday.
“The bearish alarm bells are ringing for next year’s oil balance as market players brace for the return of a supply surplus,” said Stephen Brennock of oil broker PVM.
A drop in U.S. oil production also lent prices some support. In the U.S. Gulf of Mexico, companies cut output by 40 percent on Thursday because of Hurricane Michael, even as some operators began returning crews to offshore platforms.
Michael made landfall in Florida on Wednesday as the third most powerful hurricane to strike the U.S. mainland, though it has since weakened to a tropical storm.
In the U.S. Gulf of Mexico, producers had cut output by 40 percent on Thursday due to Hurricane Michael, according to the Bureau of Safety and Environmental Enforcement, even as some operators began returning crews to offshore platforms.
The cuts represent 680,107 barrels per day of oil production, the bureau said, citing reports from 30 companies.
Michael crashed ashore Florida on Wednesday as the third most powerful hurricane to strike the U.S. mainland, leaving seven people least. It has since weakened to a tropical storm.
Source: Reuters
