Oil prices fall but losses limited by Brexit deal hopes

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Thu, 2019-10-17 23:53

LONDON: Oil prices fell on Thursday as industry data showed a
larger than expected increase in US inventories but losses were
limited after Britain and the EU announced they had reached a deal
on Brexit.

Global benchmark Brent crude was down 37 cents at $59.05 in
afternoon London trade while US WTI crude was also down 37 cents,
at $52.99.

US crude inventories soared by 10.5 million barrels to 432.5
million barrels in the week to Oct. 11, the American Petroleum
Institute’s weekly report showed, ahead of official government
stocks data.

Analysts had estimated US crude inventories rose by 2.8 million
barrels last week.

“US sanctions imposed on Chinese shipping company COSCO are
seriously denting demand for imported crude … This has a profound
impact on US crude oil inventories as reflected in last night’s
API report,” said Tamas Varga, an analyst at PVM Oil
Associates.

“US refinery maintenance is not helping to reverse the current
trend and further builds in US crude oil inventories can be
expected in the next few weeks.”

The US imposed sanctions on COSCO Shipping Tanker (Dalian) and
subsidiary COSCO Shipping Tanker (Dalian) Seaman & Ship
Management for allegedly carrying Iranian oil.

Adding to concerns about the global economy — and therefore
oil demand — data from the US showed retail sales in September
fell for the first time in seven months. Earlier data showed a
moderation in job growth and services sector activity.

Nevertheless, Brexit developments helped limit oil’s decline.
Prime Minister Boris Johnson said Britain and the EU had agreed a
“great” new deal and urged lawmakers to approve it when they
meet for a special session at the weekend.

Analysts have said any agreement that avoids a no-deal Brexit
should boost economic growth and oil demand.

However, the Northern Irish party whose support Johnson needs to
help ratify any agreement, has said that it refused to support the
pact.

Hopes of a potential US-China trade deal also supported oil. The
commerce ministry in Beijing said China hoped to reach a phased
agreement with Washington as early as possible.

But the German government has lowered its 2020 forecast for
economic growth to 1 percent from 1.5 percent, the economy ministry
said. It said Germany, Europe’s largest economy, was not facing a
crisis. 

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Source: FS – All-News-Economy
Oil prices fall but losses limited by Brexit deal hopes