Oil prices con­tinue de­cline af­ter OPEC forecast

The China Post - - MARKET -

Oil prices ex­tended their de­cline in Asia on Fri­day af­ter the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries ( OPEC) car­tel in­di­cated that cur­rent lofty out­put lev­els will re­main, while a stronger U. S. dol­lar is also caus­ing down­ward pres­sure.

Amer­i­can bench­mark West Texas In­ter­me­di­ate for Septem­ber de­liv­ery fell 32 U. S. cents to US$ 48.20 and Brent crude for Septem­ber shed 24 U. S. cents to US$ 53.07 a bar­rel in af­ter­noon trade.

Both con­tracts tum­bled Thurs­day, snap­ping two con­sec­u­tive days of gains.

Ab­dul­lah El- Badri, sec­re­tary- gen­eral of OPEC, said the group would not cut out­put in re­sponse to lower prices.

Speak­ing in Moscow af­ter meet­ing Rus- sia’s energy min­is­ter on Thurs­day, he said the car­tel is “not ready” to cut pro­duc­tion, which is cur­rently at around 30 mil­lion bar­rels per day.

An­a­lysts said the state­ment shows OPEC is de­ter­mined to de­fend its mar­ket share as it fends off com­pe­ti­tion from U. S. shale oil.

“OPEC is telling the mar­ket that cuts will not come from them,” said Daniel Ang, an in­vest­ment an­a­lyst with Phillip Fu­tures in Sin­ga­pore.

OPEC is “em­pha­siz­ing that it is fight­ing for mar­ket share,” he added.

At its most re­cent meet­ing in Vi­enna in June OPEC kept its out­put lev­els de­spite a sup­ply glut, which has de­pressed oil prices.

Prices are also un­der pres­sure by the strength of the U. S. cur­rency, which makes U. S.- dol­lar- priced oil more ex­pen­sive to hold­ers of weaker units, damp­en­ing de­mand.

The U. S. dol­lar has picked up steam on ex­pec­ta­tions the Fed­eral Re­serve will raise U. S. in­ter­est rates later this year.

The chances of a Septem­ber lift were raised Thurs­day af­ter data showed the U. S. econ­omy ex­panded 2.3 per­cent in April- June, the strong­est pace since the third quar­ter of 2014.

“The sec­ond- quar­ter GDP data sup­port the Fed’s more up­beat tone on eco­nomic con­di­tions and sug­gests that the econ­omy could cope with higher in­ter­est rates,” re­search firm Cap­i­tal Eco­nom­ics said.

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