Oil slips as economic concerns counter tightening supplies
SINGAPORE: Oil prices fell on Thursday, reversing some of the strong gains from the previous session, as economic concerns raised doubts about ongoing fuel demand growth.
US West Texas Intermediate (WTI) crude futures were at $69.88 per barrel at 06:35 GMT, down 49 cents, or 0.7 per cent, from their last settlement.
Brent crude futures LCOC1 slipped 38 cents, or 0.5 per cent, to $79.36 a barrel.
The falls were due to concerns of a potential slowdown in fuel demand growth because of trade disputes between the United States and China, the world’s two largest oil consumers, as well as emerging market turmoil. The Organization of the Petroleum Exporting Countries (OPEC) on Wednesday reduced its forecast for 2019 global oil demand growth, pointing to economic risks.
In its monthly report, OPEC said world oil demand next year would rise by 1.41 million barrels per day (bpd), 20,000 bpd less than last month and the second consecutive reduction in the forecast.
One factor that could weigh on long-term fuel demand is China’s decision to take at least 1 million heavy duty diesel trucks off the roads by 2020, and to replace them with vehicles using alternative fuels like electric engines, liquefied natural gas or to shift transport to rail.
Despite this, the short-term outlook for oil markets is for tighter supply.
Brent rose above $80 per barrel during the previous session for the first time since May, spurred by expectations that US sanctions against Iran’s oil exports, which will start in November, will tighten global markets.
WTI was pushed over $70 during the previous session due to falling crude inventory and production levels.
US crude inventories fell 5.3 million barrels in the week to Sept. 7 to 396.2 million barrels, the lowest since February 2015 and about 3 per cent below the five-year average for this time of year, the US Energy Information Administration (EIA) said on Wednesday.