Brent oil holds above $60 as lower inventories boost WTI

American crude stocks dropped last week by 10 million barrels amid concerns over global economic slowdown due to the US-China trade war. (AFP)
Updated 29 August 2019

Brent oil holds above $60 as lower inventories boost WTI

  • Concerns over a global slowdown in economic growth and its impact on oil demand are keeping prices in check

LONDON: Brent oil held above $60 a barrel on Thursday, withstanding pressure from concerns about economic growth, while a sharp fall in US inventories boosted West Texas Intermediate (WTI) crude futures.

International benchmark Brent crude was down 19 cents at $60.30 a barrel in early afternoon trade in London while WTI was up 32 cents at $56.10 a barrel.

“If the American Petroleum Institute (API) unexpectedly supplied bullets to oil bulls on Tuesday evening so that they could fire from all cylinders, the US government’s Energy Information Administration (EIA) flung the door of the ammunition depot wide open yesterday,” Tamas Varga of oil brokerage PVM said.

The EIA said on Wednesday that American crude stocks dropped last week by 10 million barrels, while gasoline and distillate stocks each fell by 2.1 million barrels.

On Tuesday, industry body API said US crude stocks had fallen by 11.1 million barrels last week.

US weekly crude production rose 200,000 barrels per day to a new record at 12.5 million bpd in the week to Aug. 23, the EIA said.

Concerns about a slowdown in economic growth due to the trade war raging between the US and China, the world’s biggest oil consumers, along with the potential hit to oil demand, are keeping prices in check.

“Trade tensions (are) hanging like a dark cloud threatening to rain over oil prices,” said Jeffrey Halley, senior market analyst at OANDA.

China’s commerce ministry said on Thursday that China and the US were discussing the next round of face-to-face trade talks scheduled for September, but hopes for progress hinged on whether Washington could create favorable conditions.

San Francisco Federal Reserve President Mary Daly said she is in a “watch and see” mode as she assesses the need for another US interest-rate cut for an economy that has “strong” momentum but faces headwinds from uncertainty and a global slowdown.

Concerns about the global economy have watered down the impact of oil production cuts that the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers have been exercising over the past two years.

“When they (OPEC and its allies) really managed to accelerate the price from late 2016 onwards they had a big tailwind of global growth acceleration, now they have this big negative headwind of global growth de-acceleration,” said Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB.

Morgan Stanley has lowered its oil price forecasts for the rest of the year, citing a weaker economic outlook, faltering demand and higher shale oil output.


Aramco international listing ‘still on the cards’: Saudi finance minister

Updated 51 min 2 sec ago

Aramco international listing ‘still on the cards’: Saudi finance minister

  • The minister said that he was “very confident” that the Saudi economy was picking up speed
  • He said that international investors had responded positively to ongoing reforms in the Kingdom

LONDON: Saudi Finance Minister Mohammed Al-Jadaan said that an international listing of Saudi Aramco was “still on the cards” but likely won’t happen soon.
He made the disclosure in an interview with Bloomberg News at the World Economic Forum’s annual meeting in Davos, Switzerland on Wednesday.
The minister also said that he was “very confident” that the Saudi economy was picking up speed, as the Kingdom successfully completed a $5 billion bond sale this week after receiving orders for four times as much.
“Yesterday showed very clearly that demand for Saudi credit is very high and very healthy. We are very pleased not only with the level of debt but also the pricing,” he said. “Demand is very positive. We are starting seeing results of Vision 2030. The numbers are proving that reform is working. We are basically cashing on the successes.
The minister said that international investors had responded positively to ongoing reforms in the Kingdom.
“I think investors are focusing on fundamentals,” he said. “They see the growth they see the potential. We are seeing a growth in FDI, a growth in the number of applications for licenses. The confidence is back in a strong way.”