Oil rises towards $69 but set for 2019's biggest weekly loss

Lloyd Doyle
May 24, 2019

Brent crude futures, the worldwide benchmark for oil prices, were at $70.40 per barrel at 0857 GMT, down 59 cents from their last close.

West Texas Intermediate crude for July delivery rose 68 cents, or 1.2 per cent, to US$58.59 a barrel on the New York Mercantile Exchange at 8:35 a.m. local time, after climbing as much as 83 cents earlier.

Oil prices jumped more than 1% on Friday amid OPEC supply cuts and Middle East tensions, but still did not fully recoup losses earlier in the week on economic slowdown jitters and swelling inventories - their steepest drops since the start of the year. However, US-China trade concerns remain far from abated despite the lack of fresh headlines as of late and emerge as the main hurdle for a more serious advance in crude oil.

Also bearish is the ongoing trade war between the United States and China, which is clouding economic growth, and with that, oil demand predictions as well. WTI fell 2.5 per cent on Wednesday after government data showed USA crude inventories rose last week, hitting their highest levels since July 2017.

Oil fails to retain the upward trend from earlier this year as it snaps the monthly opening range, and the weakening outlook for global growth may continue to drag on the price of crude amid the ongoing trade dispute between the USA and China, the two largest consumers of oil.

The US shale revolution means domestic oil production is forecast to rise 16% to around 1.1 million to 1.2 million barrels per day, according to Rystad Energy. Analysts polled by S&P Global Platts expected a fall of 2 million barrels, on average.

Beyond weak refinery demand for feedstock crude oil, the increase also came on the back of planned sales of USA strategic petroleum reserves (SPR) into the commercial market.

"Without a resolution to the ongoing trade dispute quickly, which now looks very unlikely, oil could struggle to push higher", Lawler said.

Additionally, US-Iran tensions are decreasing, some analysts said.

Outside the United States, Saudi Arabia on Wednesday said it was committed to a balanced and sustainable oil market.

"If we don't have strong enough demand growth, the market's telling us we can't justify oil in the mid-60s", he said.

Saudi Arabia has been at the forefront of supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), of which the kingdom is the de-facto leader, that began in January and are aimed at reducing global oversupply.

The physical oil market is also showing signs of tightness.

Other reports by Iphone Fresh

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