Oil re­bounds to $81, pares gain as IEA sees ad­e­quate sup­ply

Tehran Times - - ENERGY -

Oil rose to $81 a bar­rel on Fri­day, re­bound­ing af­ter two days of de­clines, though prices pared gains af­ter an­other closely watched fore­caster deemed sup­ply ad­e­quate and the out­look for de­mand weak­en­ing.

Crude was still head­ing for its first weekly drop in five weeks, pres­sured by a big rise in U.S. in­ven­to­ries and fad­ing con­cerns that loom­ing U.S. sanc­tions on Iran will cut sup­plies sig­nif­i­cantly.

A monthly re­port by the In­ter­na­tional En­ergy Agency (IEA) said the oil mar­ket looked “ad­e­quately sup­plied for now” af­ter a big rise in pro­duc­tion and trimmed its fore­casts for world oil de­mand growth this year and next.

“This is due to a weaker eco­nomic out­look, trade con­cerns, higher oil prices and a re­vi­sion to Chi­nese data,” said the IEA, which ad­vises in­dus­tri­al­ized coun­tries on en­ergy pol­icy.

In­ter­na­tional bench­mark Brent crude rose 76 cents to $81.02 a bar­rel by 0830 GMT, hav­ing dropped by 3.4 per­cent on Thurs­day. U.S. crude added 71 cents to $71.68.

Brent is still on course for a 3.7 per­cent de­cline this week, the big­gest weekly fall in about four months.

Oil found sup­port from fig­ures show­ing that China’s daily crude im­ports in Septem- ber hit their high­est since May and from a re­bound in eq­ui­ties. A drop in eq­ui­ties amid wider risk-off in­vestor sen­ti­ment had pres­sured crude on Thurs­day.

Still, the IEA re­port is the lat­est govern­ment assess­ment to pre­dict weaker de­mand ahead and con­clude that sup­ply is ad­e­quate. The Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries (OPEC) made a sim­i­lar move on Thurs­day.

“The bear­ish alarm bells are ring­ing for next year’s oil bal­ance as mar­ket play­ers brace for the re­turn of a sup­ply sur­plus,” said Stephen Bren­nock of oil bro­ker PVM.

A drop in U.S. oil pro­duc­tion also lent prices some sup­port. In the U.S. Gulf of Mex­ico, com­pa­nies cut out­put by 40 per­cent on Thurs­day be­cause of Hur­ri­cane Michael, even as some op­er­a­tors be­gan re­turn­ing crews to off­shore plat­forms.

Michael made land­fall in Florida on Wed­nes­day as the third most pow­er­ful hur­ri­cane to strike the U.S. main­land, though it has since weak­ened to a trop­i­cal storm.

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