Oil slides further amid economic fears

Fuel demand may suffer due to turbulence in emerging markets and US and China trade woes

Oil headed for the longest run of weekly declines in three years as turbulence in emerging markets and the ongoing trade conflict between the US and China stirred fears that fuel demand may suffer.

Futures added 0.8 per cent in New York, and 1.3 per cent in London, amid another labour strike at North Sea oil and gas platforms. Yet prices remained lower on the week, poised for their seventh straight loss in New York, as turmoil in Turkey and the continued ChineseAmerican tariff battle rattled investors. Oil supplies have also appeared more plentiful as US crude inventories expanded by the most since 2017, Opec raised output in July and Libya recovered some halted production.

Oil has retreated about 13 per cent from the three-year high reached at the end of June as concerns about the global economy grow just as the Organisation of Petroleum Exporting Countries and its allies revive production.

“Bullish catalysts are in short supply, whereas newfound economic headwinds have given oil bears ample ammunition to keep prices on the back foot,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London.

West Texas Intermediate crude for September delivery traded at $66 (Dh242) a barrel on the New York Mercantile Exchange, up 54 cents, at 8:31am local time. Total volume traded was about 43 per cent below the 100-day average. Prices are down about 11 per cent over the last seven weeks and are headed for the longest stretch of weekly losses since August 2015.

Brent for October was at $72.35 a barrel on the Londonbased ICE Futures Europe exchange, up 92 cents. Prices have fallen about 0.6 per cent this week. The global benchmark crude traded at a $6.91 premium to WTI for the same month.

Stoking concerns

“If the Turkish crisis worsens further, it will stoke concerns over the negative impact on the global economy, which already faces a US-China trade war,” Satoru Yoshida, a commodity analyst at Rakuten Securities Inc. in Tokyo, said by phone. “Prices will also be negatively impacted if US crude inventories continue to rise in the coming weeks as stockpiles tend to drop in August.”

Broader risk assets also took a beating this week, with Asian equities to emerging market currencies and commodities sliding lower after the Turkish lira’s plunge sent shock waves through markets.

13% Oil has retreated from 3-year high reached at the end of June