Oil slips on economic slowdown, but OPEC-led cuts still support

The International Energy Agency said on Friday it expected oil markets to be in a modest deficit from the second quarter of 2019. (Reuters)
Updated 18 March 2019
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Oil slips on economic slowdown, but OPEC-led cuts still support

  • US manufacturing output fell for a second straight month in February
  • It was a sign that the world’s biggest economy has been slowing down in the first quarter

SINGAPORE: Oil prices dipped on Monday amid concerns that an economic downturn may dent fuel consumption, but crude markets remain broadly supported by supply cuts led by producer group OPEC and US sanctions against Iran and Venezuela.
Brent crude oil futures were at $67.03 per barrel at 0231 GMT, down 13 cents, or 0.2 percent, from their last close, but not far off the $68.14 per barrel 2019-high reached last week.
US West Texas Intermediate (WTI) futures were at $58.32 per barrel, down 20 cents, or 0.3 percent, from their last settlement, and also not far off their 2019-high of $58.95 from the previous week.
“The greatest downside risk to our oil price view is demand weakness on slower economic growth. Our base case is that global oil demand will increase by 1.3 million barrels per day (bpd) in 2019 ... A synchronized global slowdown in growth could push global demand growth to below 1 million bpd,” Bernstein Energy said on Monday.
US manufacturing output fell for a second straight month in February, in a sign that the world’s biggest economy has been slowing down in the first quarter.
In Asia, Japan’s exports fell for a third straight month in February in a sign of growing strain from slowing global demand.
Despite this, oil prices have gained around a quarter since the start of the year amid US sanctions against Iran and Venezuela, and as the Organization of the Petroleum Exporting Countries (OPEC) and non-affiliated allies like Russia — known as OPEC+ — have pledged to withhold 1.2 million bpd in supply to prop up prices.
Saudi Arabia said on Sunday that balancing oil markets was far from done as inventories were still high.
Russia also said production cuts would stay in place at least until June.
As a result, Bernstein forecast an inventory draw of 37 million barrels in the first quarter for the 36 member countries of the Organization for Economic Co-operation and Development, which comprises most industrialized nations.
The International Energy Agency said on Friday it expected oil markets to be in a modest deficit from the second quarter of 2019.
Key for the supply and demand balance will be the US, where crude production has soared by around 2 million bpd over the past year, thanks largely to an onshore boom in shale formation drilling.
The number of rigs drilling for new oil production in the United States has been falling in 2019, and hit its lowest level since April 2018 last week, at 833 operating rigs.
However, US crude oil production still increased at the start of 2019, hitting a record 12.1 million barrels per day (bpd) in February, data from the Energy Information Administration (EIA) showed.
Output has since dipped back to 12 million bpd, but that still makes America the world’s biggest crude oil producer.


High-level Russian delegation in Iraq to discuss trade ties

Updated 59 min 56 sec ago
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High-level Russian delegation in Iraq to discuss trade ties

  • The two sides discussed trade in agriculture and industry
  • Iraq is reliant on imports to feed its population, and imports a significant portion of food items from Iran

BAGHDAD: A high-level Russian delegation is visiting Iraq to discuss trade and economic cooperation between the two countries.
The delegation, headed by Deputy Prime Minister Yury Borisov, met with Iraqi Foreign Minister Mohammed Alhakim on Thursday.
Borisov said the two sides discussed trade in agriculture and industry and said his country is seeking to increase food exports to Iraq.
Iraq is reliant on imports to feed its population, and imports a significant portion of food items from Iran.
The Russian delegation is expected to meet Iraqi Prime Minister Adel Abdul-Mahdi later in the day.