Oil prices claw back on sup­ply con­cerns, but de­mand wor­ries drag

Tehran Times - - ENERGY -

Oil on Fri­day clawed back some of its losses from the pre­vi­ous ses­sion, when prices fell the most in a month, with con­cerns about sup­ply coun­ter­ing wor­ries that emerg­ing mar­ket crises and trade dis­putes could dent de­mand.

Brent crude was up 3 cents at $78.21 a bar­rel by 0634 GMT, af­ter fall­ing 2 per­cent on Thurs­day. The global bench­mark rose on Wed­nes­day to its high­est since May 22 at $80.13.

U.S. West Texas In­ter­me­di­ate (WTI) fu­tures were up 18 cents, or 0.2 per­cent, at 68.76 a bar­rel, af­ter drop­ping 2.5 per­cent on Thurs­day.

Brent is head­ing for a 1.8 per­cent gain this week, while WTI is on track for a 1.5 per­cent in­crease.

“Prices re­main well sup­ported as the mar­ket con­tin­ues to fret about on­go­ing struc­tural sup­ply is­sues else­where,” ANZ Re­search said in a note.

The In­ter­na­tional En­ergy Agency on Thurs­day warned that although the oil mar­ket was tight­en­ing at the mo­ment and world oil de­mand would reach 100 mil­lion bar­rels per day (bpd) in the next three months, global eco­nomic risks were mount­ing.

“As we move into 2019, a pos­si­ble risk to our fore­cast lies in some key emerg­ing economies, partly due to cur­rency de­pre­ci­a­tions ver­sus the U.S. dol­lar, rais­ing the cost of im­ported en­ergy,” the agency said.

“In ad­di­tion, there is a risk to growth from an es­ca­la­tion of trade dis­putes,” the Paris-based agency said.

China will not buckle to U.S. de­mands in any trade ne­go­ti­a­tions, the ma­jor state-run China Daily news­pa­per said in an ed­i­to­rial on Fri­day, af­ter Chi­nese of­fi­cials wel­comed an in­vi­ta­tion from Wash­ing­ton for a new round of talks.

U.S. Pres­i­dent Trump said on Twit­ter on Thurs­day that the United States holds the up­per hand in talks.

“We are un­der no pres­sure to make a deal with China, they are un­der pres­sure to make a deal with us,” Trump tweeted.

Sup­ply con­cerns were stoked by data show­ing that U.S. crude pro­duc­tion fell by 100,000 bpd to 10.9 mil­lion bar­rels per day last week as the in­dus­try faces pipe­line ca­pac­ity con­straints.

Though weekly out­put slipped, the United States likely sur­passed Rus­sia and Saudi Ara­bia ear­lier this year to be­come the world’s largest crude oil pro­ducer, based on pre­lim­i­nary es­ti­mates from the En­ergy In­for­ma­tion Ad­min­is­tra­tion.

Although the EIA does not pub­lish crude pro­duc­tion forecasts for Rus­sia and Saudi Ara­bia in its short term out­look, it ex­pects that U.S. out­put will con­tinue to ex­ceed Rus­sian and Saudi pro­duc­tion for the re­main­ing months of 2018 and through 2019.

The loss of Ira­nian oil to the mar­ket as re­fin­ers are cut­ting or halt­ing pur­chase ahead of U.S. sanc­tions in Novem­ber is also rais­ing con­cerns about sup­ply.

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