Oil Pares Third Weekly Gain as Economy Fears Mix With OPEC Cuts

https://www.bloomberg.com/news/articles/2019-03-22/oil-set-for-third-weekly-gain-on-u-s-stockpile-drop-opec-cut

Oil And Gas Operations

Photographer: George Osodi

Oil fell from its highest closing level in four months in New York as signs of a slowing global economy stirred concerns about fuel demand.

West Texas Intermediate futures retreated 1.3 percent.
European equities
dropped after data showed Germany’s contracting manufacturing sector held back euro-zone growth. The yield on the nation’s
10-year bonds
— Europe’s benchmark — dropped below zero for the first time in two years, underscoring fears about the region. A stronger U.S. dollar also dimmed the appeal of commodities.

“There’s enough to worry about,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “The U.S. dollar, weaker sentiment, recession fears.”

Crude is nonetheless set for a third weekly increase, having climbed above $60 a barrel in New York on Wednesday for the first time this year, as OPEC and its allies reaffirmed their commitment to supply cutbacks. While disruptions in Venezuela and Iran have also squeezed supplies, uncertainty surrounding ongoing trade talks between the U.S. and China is keeping investors wary.

Oil in New York heads for a third weekly advance

WTI for May delivery was at $59.22 a barrel, down 76 cents, on the New York Mercantile Exchange at 8:28 a.m. local time. It settled at $59.98 a barrel on Thursday, the highest closing level since Nov. 9.

Brent for May settlement fell 97 cents to $66.89 a barrel on the London-based ICE Futures Europe exchange. It lost 0.9 percent on Thursday, dropping for the first time in four days. Prices are 0.4 percent lower this week. The global benchmark crude was at a premium of $7.68 to WTI.

The Stoxx Europe 600 Index dropped as much as 0.9 percent and the euro erased gains after the
deepest slump
in German manufacturing in over six years.

Surprise Drop

The U.S. Energy Information Administration showed crude stockpiles dropped by the most since July last week, defying analysts’ forecasts for a 1.75 million-barrel increase. However, they are still near the five-year average for this time of the year, suggesting growing shale output still risks undermining OPEC and its partners’ efforts to cap production.

Saudi Arabian Energy Minister Khalid Al-Falih said OPEC+ remains committed to curbing output when the Joint Ministerial Monitoring Committee met on Monday. Still,
Russia
and Iraq, the coalition’s other major suppliers, suggested the group should monitor the market until May or June before making a decision on extending the cuts through the year as developments in Venezuela and Iran may influence supply.

Other oil-market news:
  • OPEC’s
    oil shipments
     are seen increasing to 24.09 million barrels a day in the four weeks to April 6, according to data from tanker tracker Oil Movements.
  • A top U.S. Interior Department official told oil industry leaders the Trump administration is seeking to sign contracts leasing 
    new coastal waters for oil drilling
     under favorable terms that will be difficult for future presidents to revoke or rewrite.
  • President Donald Trump said Friday that a trade deal with China is 
    close
     as he prepared to send his negotiators to Beijing for a fresh round of talks next week, but U.S. officials downplayed the prospect of a swift conclusion.

— With assistance by Heesu Lee

Original Source

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