Oil moves nearer six-year low on Ja­pan data, over­sup­ply

The Pak Banker - - INTERNATIONAL BUSINESS/SPORTS -

Oil fell to­wards six-year lows on Mon­day, on data show­ing the econ­omy of Ja­pan, the world's third big­gest oil con­sumer, con­tracted in the sec­ond quar­ter.

The global over­sup­ply pic­ture was ex­ac­er­bated by another weekly jump in U.S. oil rig ad­di­tions, hint­ing at grow­ing pro­duc­tion, and news that Oman pro­duced a record-break­ing 1 mil­lion bar­rels a day in July.

U.S. crude, or West Texas In­ter­me­di­ate (WTI), for Septem­ber was trad­ing 36 cents lower at $42.14 a bar­rel at 1038 GMT, close to its low­est level in more than six years.

Brent for Oc­to­ber edged back, up 22 cents at $49.41 a bar­rel, hav­ing reached an in­tra­day low of $48.35. This was a few dol­lars shy of its six-year low of $45.19. The Septem­ber con­tract ex­pired on Fri­day.

Over the past two weeks, U.S. crude prices have fallen by more than 10 per­cent on U.S. sup­ply con­cerns. Brent has fallen at a slower rate of around 4 per­cent. "We have seen Brent swing up and down over the past two weeks be­cause of a lack of con­sen­sus about where oil should go di­rec­tion­ally," BNP Paribas energy com­modi­ties strate­gist Gareth Lewis-Davies said.

Pro­duc­tion by the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries is run­ning well above de­mand fill­ing stock­piles world­wide. Iran is ex­pected to in­crease its oil ex­ports once Western sanc­tions are lifted af­ter rat­i­fi­ca­tion of a re­cent nu­clear deal. "The over­sup­ply story re­mains well in­tact, which fu­els the bear­ish sen­ti­ment," said Carsten Fritsch, se­nior oil an­a­lyst at Com­merzbank in Frank­furt.

Many an­a­lysts ex­pect prices to re­main de­pressed as bear­ish fac­tors hint­ing at sus­tained over­sup­ply are set to per­sist. "The end of the sum­mer driv­ing sea­son and the start of re­fin­ery main­te­nance sea­son will weigh on near-term de­mand and pres­sure prices," said So­ci­ete Gen­erale oil an­a­lyst Michael Wittner. "Over­sup­ply, high stocks, and sea­sonal weak­nesses are out­weigh­ing record de­mand growth," he added.

De­mand for crude oil is set to fall in the next few weeks as re­finer­ies start an­nual main­te­nance. A num­ber of Euro­pean re­finer­ies will close for main­te­nance in Septem­ber and Oc­to­ber, in­clud­ing Royal Dutch Shell, Sta­toil and To­tal.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.