Oil drops 1% as IEA sees slow market rebalancing
london — Oil prices fell by one per cent on Friday to their lowest in more than a week after the International Energy Agency said market rebalancing was taking time despite strong demand growth because of weak Opec compliance with output cuts.
Brent crude, the global benchmark, was at $51.42 a barrel at 0830GMT, down 48 cents. That was down 0.9 per cent from its last close and its lowest since August 1. US West Texas Intermediate (WTI) crude was down 48 cents, or 1 per cent, at $48.11 per barrel, reaching its lowest since July 26.
Oil prices touched 2-1/2 month highs on Thursday, but retreated to close down by around 1.5 per cent, with US prices slipping back below $50 per barrel amid ongoing oversupply concerns.
“There would be more confidence that re-balancing is here to stay if some producers party to the output agreements were not, just as they are gaining the upper hand, showing signs of weakening their resolve,” the IEA said in its monthly report.
The IEA said Opec’s compliance with the cuts in July had fallen to 75 per cent, the lowest since the cuts began in January. In addition, Opec member Libya, which is currently exempt from the output cuts, steeply increased output.
“Crude oil prices failed to hold recent gains, with a nervous market starting to doubt recent falls in inventories,” ANZ bank said in a note. “Supply-side issues also weighed on prices.”
Saudi Arabian Energy Minister Khalid Al Falih said the kingdom did not rule out additional oil production cuts, the Saudi-owned Al Sharq Al Awsat newspaper reported on Friday. — Reuters