Oil slips on con­cerns of eco­nomic slow­down

The Myanmar Times - - Business | International -

OIL prices slipped on Tues­day as con­cerns that an eco­nomic slow­down may curb fuel de­mand growth over­shad­owed the rein­tro­duc­tion of sanc­tions on Iran.

U.S. West Texas In­ter­me­di­ate (WTI) crude fu­tures were at $62.93 a bar­rel at 0131 GMT, down 17 cents, or 0.3 per­cent, from their last set­tle­ment.

In­ter­na­tional Brent crude oil fu­tures were down 21 cents, or 0.3 per­cent, at $72.96 a bar­rel.

An­a­lysts said ex­pec­ta­tions of an eco­nomic slow­down in com­ing months was out­weigh­ing sup­ply-side risks to crude mar­kets from the rein­tro­duced U.S. sanc­tions against Iran, which started on Mon­day.

Hedge fund man­agers were net sell­ers of pe­tro­leum-linked fu­tures and op­tions for a fifth week run­ning last week as con­cerns about sanc­tions on Iran evap­o­rated and in­vestors re­fo­cused on eco­nomic wor­ries.

The net long po­si­tion in the six most im­por­tant pe­tro­leum-linked fu­tures and op­tions con­tracts was cut by a fur­ther 73 mil­lion bar­rels in the week to Oct. 30. Port­fo­lio man­agers have been net sell­ers of 371 mil­lion bar­rels since the end of Septem­ber, tak­ing their net long po­si­tion to the low­est level for 15 months, ac­cord­ing to records pub­lished by reg­u­la­tors and ex­changes.

Jameel Ah­mad, head of mar­ket re­search at fu­tures bro­ker­age FXTM said the “sanc­tions on Iran have been... priced into the oil mar­kets a long time ago”, and that he would “in­stead fo­cus more heav­ily on the global de­mand out­look be­cause of the on­go­ing ex­ter­nal un­cer­tain­ties weigh­ing down on eco­nomic prospects.”

Ah­mad added that he saw a slow­down in eco­nomic and fuel de­mand growth as “more of a risk for oil over the com­ing months.”

Cur­rency weak­ness is putting pres­sure on key growth economies in Asia, in­clud­ing In­dia and In­done­sia.

At the same time, the trade dis­pute be­tween the United States and China is threat­en­ing growth in the world’s two big­gest economies.

On the sup­ply-side, oil is in am­ple avail­abil­ity de­spite the sanc­tions against Iran.

Wash­ing­ton has granted 180-day ex­emp­tions to eight im­porters - China, In­dia, South Korea, Ja­pan, Italy, Greece, Tai­wan and Turkey. These are also Iran’s big­gest buy­ers, mean­ing Iran will be al­lowed to still ex­port some oil for now.

At the same time, out­put from the world’s top-three pro­duc­ers, Rus­sia the US and Saudi Ara­bia, is ris­ing.

Out­put from these three coun­tries in Oc­to­ber ex­ceeded 33 mil­lion bar­rels per day (bpd) for the first time, mean­ing they alone meet more than a third of the world’s al­most 100 mil­lion bpd of crude oil con­sump­tion.

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