Oil head for weekly loss as supply worries wane
Oil fell on Friday and were heading for a weekly loss on a faster than expected recovery in Saudi output while slowing Chinese economic growth dampens the demand outlook.
Brent fell 93 cents to $61.81 a barrel, while U.S. crude slipped by 65 cents to $55.76. Both were down almost 4 percent over the week, representing WTI’s biggest weekly loss in 10 weeks and Brent’s biggest in seven.
Brent and WTI were also hit by a Wall Street Journal report citing unnamed sources saying that Saudi Arabia had agreed a partial ceasefire in Yemen, said analysts in the Reuters Global Oil Forum.
Brent is just above its level before attacks on Saudi facilities on Sept 14, which initially halved the kingdom’s production.
Sources told Reuters this week that Saudi Arabia had restored capacity to 11.3 million barrels per day. Saudi Aramco has yet to confirm it is fully back online.
“The risk premium is deflating further,” said Saxo Bank’s Ole Hansen.
The International Energy Agency (IEA) said on Friday that it might cut its estimates for global oil demand for 2019 and 2020 should the global economy weaken further.
“If the global economy weakens, for which there are already some signs, we may lower oil demand expectations,” IEA Executive Director Fatih Birol told Reuters.
In China, the world’s second-largest economy and biggest importer of crude oil, industrial companies reported a contraction in profits in August.
A surprise 2.4 million-barrel build in U.S. crude inventories last week also weighed on prices.
Key oil freight rates from the Middle East to Asia rocketed as much as 28 percent on Friday in the global oil shipping market, spooked by U.S. sanctions on units of China’s COSCO for alleged involvement in ferrying crude out of Iran.
The COSCO vessels are equal to about 7.5 percent of the world’s fleet of supertankers, Refinitiv data showed.
Emerging details connected to the impeachment inquiry into U.S. President Donald Trump also helped to dent demand sentiment, analysts said.
Brent, which is on course for its biggest weekly loss in seven weeks, is just above its level before Sept. 14 attacks on Saudi facilities that initially halved the kingdom’s production.
Sources told Reuters this week that Saudi Arabia had restored capacity to 11.3 million barrels per day. Saudi Aramco has yet to confirm it is fully back online.
“The political risk premium in crude prices has largely evaporated,” Jefferies analysts said in a note.
The International Energy Agency (IEA) said on Friday it might cut its growth estimates for global oil demand for 2019 and 2020 should the global economy weaken further.
“It will depend on the global economy. If the global economy weakens, for which there are already some signs, we may lower oil demand expectations,” IEA Executive Director Fatih Birol told Reuters.
In China, the world’s second largest economy and top importer of crude, industrial firms reported a contraction in profits in August.
A surprise 2.4 million-barrel build in U.S. crude inventories last week also weighed on prices.
Key oil freight rates from the Middle East to Asia rocketed as much as 28 percent on Friday in the global oil shipping market, spooked by U.S. sanctions on units of Chinese giant COSCO for alleged involvement in ferrying crude out of Iran.
The COSCO vessels are equal to about 7.5 percent of the world’s fleet of supertankers, Refinitiv data showed.
Emerging details connected to the impeachment inquiry into U.S. President Donald Trump also helped dent demand sentiment, analysts said.
Source: Reuters
