Oil prices fall on rise in USA stocks, demand worries

Cornelia Mascio
Luglio 18, 2018

Brent oil prices fell to a three-month low on Wednesday on expectations that the combination of slowing demand and rising production would cause global stocks to build. Analysts said US stocks data due later Wednesday could provide an early indication of this.

An oil tanker unloads crude oil at a crude oil terminal in Zhoushan, Zhejiang province, China July 4, 2018.

Brent crude, the global oil benchmark, was down 0.9% to $71.51 a barrel on London's ICE Futures exchange. They rose 32 cents to $72.16 a barrel on Tuesday, after earlier touching a three-month low.

"These supply shifts, alongside the ongoing surge in Saudi production, create the risk that the oil market moves into surplus in third-quarter 2018", the bank said.

"The correction in the oil price represents something of a convergence between fundamentals and physical realities", said David Reid, lead crude market analyst at consultancy JBC Energy.

The U.S. oil market has been tight this year but data on Tuesday from the American Petroleum Institute showed an unexpected rise of over 600,000 barrels in crude inventories.

The benchmarks had steadied after big declines on Monday and last week as supply disruptions in Venezuela came to the fore and as analysts had been forecasting a decline of 3.6 million barrels in U.S. inventories for the week through July 13.

Official numbers from the U.S. Department of Energy's Energy Information Administration are due at 10:30 a.m. EDT (1430 GMT) on Wednesday.

"Oil is trading lower this morning on the back of the API release, and price action later today will largely depend on what the EIA release", said ING commodities strategist Warren Patterson.

On the demand-side, intensifying risks over trade tensions between the United States and China could drag on the global economic outlook, BMI Research said.

"The economic outlook is broadly positive, but a number of headwinds are emerging, not least a stronger dollar, rising inflationary pressures and tightening liquidity", BMI said.

"Ultimately, global inventories are low, oil demand remains robust and we still expect a deficit once U.S secondary sanctions are reintroduced".

Kansas City Federal Reserve Bank President Esther George said on Tuesday uncertainty over US trade policy could slow the economy, even if recently imposed tariffs are too small to have a big impact.

George called trade policy a "significant" downside risk to her outlook for economic growth, even as tax cuts and other fiscal policy is an upside risk.

Altre relazioniGrafFiotech

Discuti questo articolo

Segui i nostri GIORNALE