Oil prices down as OPEC fans over­sup­ply fears

The Myanmar Times - - International Business -

OIL prices re­sumed their down­ward spi­ral yes­ter­day af­ter Or­gan­i­sa­tion of the Petroleum Ex­port­ing Coun­tries (OPEC) sparked fresh wor­ries about an over­sup­ply cri­sis with a forecast that global out­put will in­crease next year.

The com­mod­ity ral­lied for most of Au­gust on hopes for a pro­duc­tion lim­i­ta­tion deal at a meet­ing be­tween OPEC and Rus­sia this month, but it has taken a beat­ing in re­cent weeks as traders grow cyn­i­cal that the Al­giers gath­er­ing will end in suc­cess.

Adding to the pres­sure has been a pick-up in the dol­lar and signs that de­mand re­mains weak.

The OPEC on Septem­ber 12 pre­dicted non-mem­ber coun­tries would see out­put rise in 2017, re­vis­ing its pre­vi­ous ex­pec­ta­tions of a drop.

Yes­ter­day, US bench­mark West Texas In­ter­me­di­ate dipped 72 cents to US$45.57 and Brent fell 63 cents to $47.69.

Prices have seen wild swings this past week. On Septem­ber 8 they surged more than $2 af­ter data showed US stock­piles fell the most in 17 years.

How­ever, those gains were erased the fol­low­ing day as an­a­lysts said the in­ven­to­ries de­cline was be­cause of the sus­pen­sion of im­ports and shut­down of some pro­duc­tion ow­ing to a se­vere hur­ri­cane in the Gulf of Mex­ico.

“Oil prices are un­der pres­sure on re­newed over­sup­ply con­cerns,” Bernard Aw, an an­a­lyst with IG Mar­kets in Sin­ga­pore, told AFP.

Fore­casts that US stock­piles will show a rise when fresh data is re­leased to­day would give “cre­dence to OPEC’s pre­dic­tion that out­put from non-OPEC pro­duc­ers will in­crease next year”, Mr Aw added.

Traders are keep­ing watch on the Fed­eral Re­serve with spec­u­la­tion rife that it could lift bor­row­ing costs. Such a move would strengthen the dol­lar, which would make oil more ex­pen­sive for hold­ers of other currencies, dam­ag­ing de­mand. –

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