Oil slips as focus shifts from Saudi supply to global demand concerns

Workers start clearing up the damaged facilities at Saudi Aramco’s site in Abqaiq. (Reuters)
Updated 24 September 2019

Oil slips as focus shifts from Saudi supply to global demand concerns

  • ‘The demand side of the equation is back in focus’
  • Saudi Arabia has restored more than 75 percent of crude output lost after the attacks on its facilities

SINGAPORE: Oil prices eased on Tuesday as weak manufacturing data from Europe and Japan focused market attention on the gloomy outlook for demand and away from uncertainty around supply disruptions in Saudi Arabia.
Brent crude futures fell 35 cents to $64.42 a barrel by 0408 GMT, while US West Texas Intermediate (WTI) futures were at $58.36, down 28 cents.
“The demand side of the equation is back in focus,” said Michael McCarthy, senior market analyst at CMC Markets in Sydney, pointing to sluggish manufacturing numbers in leading economies in Europe as well as Japan.
“That’s why we’re seeing a little bit more (downward) pressure on Brent than West Texas at the moment.”
Still, oil prices remained at comparatively elevated levels for the year in the wake of the Sept. 14 attack on Saudi Arabia’s largest oil processing facility that halved output in the world’s top oil exporter.
Reuters reported that Saudi Arabia has restored more than 75 percent of crude output lost after the attacks on its facilities and will return to full volumes by early next week. But the Wall Street Journal reported on Monday that repairs at the plants could take months longer than anticipated.
“Nine days after the oil facility attack in Saudi Arabia (SA), we still see divergent market views on when the damaged supplies will be restored,” analysts at Nomura said in a note.
“While the damaged plants may be repaired in the next couple of weeks, increasing actual oil supplies may require monitoring.”
European powers — Britain, Germany and France — backed the United States in blaming Iran for the Saudi oil attack, urging Tehran to agree to new talks with world powers on its nuclear and missile programs and regional security issues.
Meanwhile a preliminary Reuters poll found on Monday that US crude oil and distillate stockpiles were expected to have dropped last week.
Seven analysts polled by Reuters estimated, on average, that crude inventories fell 800,000 barrels in the week to Sept. 20.
The poll was conducted ahead of key reports from the American Petroleum Institute, an industry group, to be released on Tuesday and from the Energy Information Administration on Wednesday.


Oil retreats in face of renewed coronavirus uncertainty

Updated 22 February 2020

Oil retreats in face of renewed coronavirus uncertainty

  • G20 finance leaders to meet in Saudi Arabia at the weekend to discuss risks to the global economy
  • OPEC+ has been withholding supply to support prices and many analysts expect an extension or deepening of the curbs

LONDON: Oil prices fell on Friday as weak Asian data and a rise in new coronavirus cases fuelled uncertainty about the economic outlook while leading crude producers appeared to be in no rush to curb output.

Brent crude was down $1.56, or 2.6 percent, at $57.75 in afternoon trade, while U.S. crude dropped $1.25, or 2.3 percent, to $52.63.

"With Brent failing to breach the $60 level on Thursday despite better than expected U.S. oil inventory data, rising market uncertainty is dragging down oil prices on Friday," said UBS analyst Giovanni Staunovo.

"Market participants who benefited from the price rise in recent days might prefer not to go into the weekend with a long position."

 

China reports rise in coronavirus cases.

Japan factory activity shrinks at fastest pace since 2012.

Russia says early OPEC+ meeting no longer makes sense.

Finance leaders from the Group of 20 major economies meet in Saudi Arabia at the weekend to discuss risks to the global economy after new Asian economic and health data kept investors on guard.

Beijing reported an uptick in coronavirus cases on Friday and South Korea reported 100 new cases, doubling its infections. In Japan, meanwhile, more than 80 people have tested positive for the virus.

Factory activity in Japan registered its steepest contraction in seven years in February, hurt by fallout from the outbreak. 

"We still believe that the market is likely to trade lower from current levels, given the scale of the surplus over the first half of this year, and the need for the market to send a signal to OPEC+ that they must take further action at their meeting in early March," said ING analyst Warren Patterson.

Russian Energy Minister Alexander Novak said on Thursday that global oil producers understood it would no longer make sense for the Organization of the Petroleum Exporting Countries and its allies to meet before the planned gathering.

The group, known as OPEC+, has been withholding supply to support prices and many analysts expect an extension or deepening of the curbs.