US crude sinks to lowest since July

Updated 28 December 2013
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US crude sinks to lowest since July

LONDON: US crude fell toward $96 a barrel to its lowest since July on Wednesday, outpacing a smaller drop in Brent futures, pressured by ample supplies and a further inventory build-up in the United States, the world's top consumer.
Maintenance at US refineries and pipeline outages have led to an increase in domestic stocks, stretching Brent's premium to the US benchmark also known as WTI to more than $13 a barrel, its widest since April.
US crude fell $1.83 to $96.47 and earlier reached $96.16, its lowest since July 1. Brent crude fell $1.23 to $108.74 a barrel by 1445 GMT, after hitting a session high of $110.06.
"The weakness in the Brent/WTI spread reflects refinery maintenance and growing crude stocks in the US," said Christopher Bellew, an oil broker at Jefferies Bache."
"Other bearish factors are the warm autumn in the northern hemisphere and Libyan oil coming back onto the market."
Adding to a series of reports of rising crude stocks, the US government's Energy Information Administration - returning to its normal schedule after the government shutdown - said inventories rose by 5.2 million barrels, more than forecast.
On Monday, the US government said they rose by 4 million barrels in the week to Oct. 11 and increased at the Cushing storage hub for the first time since the end of June.
The EIA report released at 1430 GMT showed a larger rise in crude stocks than the 2.9-million-barrel increase expected by analysts and the 3-million-barrel increased reported by industry group the American Petroleum Institute on Tuesday.
Brent could break below $109, Bellew said earlier in the day, and other analysts saw a weakening chart pattern for US crude. Its 200-day moving average at $98.62 is now a resistance level after prices fell below that mark.
"The technical picture in WTI is turning more negative as WTI broke the support of the 200-day moving average and it has its five-day moving average trending below the nine-day," said Olivier Jakob, consultant at Petromatrix.
Stockpiles also built in China, the second-largest oil consumer, in September, official news agency Xinhua said on Wednesday, as crude imports jumped to a record high.
Rising output of shale oil added to the picture of an amply supplied US market. The Eagle Ford formation in Texas has beaten North Dakota's Bakken to the milestone of 1 million barrels per day, the EIA said.
Uncertainty over the future of Scotland's Grangemouth refinery also supported Brent. The refinery provides steam to a plant which processes Forties, the largest crude oil stream underpinning Brent futures.


Oil prices pressured by economic slowdown, but OPEC cuts support

Updated 20 March 2019
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Oil prices pressured by economic slowdown, but OPEC cuts support

  • Analysts said an economic slowdown could soon dent fuel consumption
  • OPEC has pledged to withhold around 1.2 million barrels per day of crude supply

SINGAPORE: Oil prices were on Wednesday weighed down by economic growth concerns that dampened the outlook for fuel consumption, but supported by voluntary supply cuts led by producer club OPEC and by US sanctions against Iran and Venezuela.
International Brent crude oil futures were at $67.55 a barrel at 0432 GMT, down 6 cents, or 0.1 percent, from their last close. Brent on Tuesday touched its highest since Nov. 16 at $68.20 a barrel.
US West Texas Intermediate (WTI) crude futures were at $58.92 per barrel, down 11 cents, or 0.2 percent, from their previous settlement. WTI on Tuesday reached its strongest level since Nov. 12 at $59.57 a barrel.
Analysts said an economic slowdown could soon dent fuel consumption.
“Global growth concerns and ongoing oversupply fears (are) creating headwinds for the commodity,” said Lukman Otunuga, analyst at futures brokerage FXTM.
Asian business confidence held near three-year lows in the first quarter as a US-China trade dispute dragged on, pulling down a global economy that is already on a downward path, a Thomson Reuters/INSEAD survey found on Wednesday.
The dips come after crude prices rose by more than a quarter this year, pushed up by a pledge led by the Organization of the Petroleum Exporting Countries (OPEC) to withhold around 1.2 million barrels per day (bpd) of supply as well as by US sanctions against oil exporters Iran and Venezuela.
“The shaky supply outlook with regard to Venezuela and Iran, as well as the petro-nations’ output restrictions are top of mind in the oil market,” said Norbert Ruecker, head of economics at Swiss bank Julius Baer.
Ruecker said oil prices were likely capped around $70 per barrel as fuel price inflation, as seen last year, would hit demand at that level.
At the same time, he said oil prices were supported above $50 per barrel as investment into US shale output growth would cease below that price.
Between those price levels, Ruecker said “the US shale boom almost fully meets global oil demand growth mirrored by the strongly expanding crude oil exports,” which hit a record 3.6 million bpd in February.
“We see ... roughly 1.2 million bpd of US shale oil growth over the coming year,” Ruecker said, which is in line with most global oil demand growth forecasts of 1 million to 1.3 million barrels per day for 2019.
The US Energy Information Administration is due to publish its weekly crude production and storage level report around 1700 GMT on Wednesday.