Oil extends decline after slump on high inventories, demand outlook

Author: 
Reuters
ID: 
1560400311974247600
Thu, 2019-06-13 03:39

TOKYO: Oil prices fell for a second day on Thursday, extending
declines of as much as 4 percent in the previous session, on
continued increases in US crude stockpiles and concerns about lower
demand growth.
Brent crude futures were down 6 cents, or 0.1 percent, at $59.91 a
barrel by 0336 GMT after earlier rising slightly. Prices fell 3.7
percent on Wednesday to settle at $59.97, the international
benchmark’s lowest close since January 28.
US West Texas Intermediate crude futures were down 8 cents, or 0.2
percent, at $51.06 a barrel. They fell 4 percent in the previous
session to $51.14, the lowest close since January 14.
“It was a brutal move, sheer panic,” said Stephen Innes,
managing partner at Vanguard Markets.
The US Energy Information Administration (EIA) on Wednesday
reported crude stockpiles rose unexpectedly for a second week in a
row, climbing 2.2 million barrels last week after analysts had
forecast a decrease of 481,000 barrels.
At 485.5 million barrels, US commercial stocks were at their
highest since July 2017 and about 8 percent above the five-year
average for this time of year, it said.
On Tuesday, the EIA cut its forecasts for 2019 world oil demand
growth.
The negative outlook is prompting hedge fund managers to exit oil
positions at the fastest rate since the fourth quarter of 2018 due
to increasing fears about the health of the global economy.
The escalating trade war between the United States and China, the
world’s two biggest oil consumers, is causing the most concern
among oil analysts, with consultants and banks cutting their demand
growth forecasts.
Goldman Sachs said on Wednesday an uncertain macroeconomic outlook
and volatile oil production from Iran and others could cause the
Organization of the Petroleum Exporting Countries (OPEC) to roll
over supply cuts it has enacted with other producers.
OPEC and non-member producers including Russia have limited their
oil output by 1.2 million barrels per day this year to prop up
prices.
OPEC is set to meet at the end of June though a meeting of the
wider producers that agreed to the cuts, known as OPEC+, may not
occur until early July.
While officials from some OPEC members have said that the larger
OPEC+ group will likely roll over the cuts, Algeria has proposed
increasing the reductions, according to four sources familiar with
the matter.
However, Goldman believes the producers will maintain the current
supply levels.
“Fundamental uncertainty on the current and forward states of the
global oil market is high,” Goldman said.
“We believe that this will lead the group to roll forward its
current agreement, with likely no change to country level quotas
given the difficulty in determining required production levels in
coming months,” the bank’s analysts said.

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Source: FS – All-News-Economy
Oil extends decline after slump on high inventories, demand outlook