(Bloomberg) – Oil fell the most in almost a week, as investors assessed the International Energy Agency’s declining forecasts for global oil demand, in part due to a delay in air travel.
Load error
US crude futures lost steam and fell 1% on Thursday after closing at a high of five months on Wednesday. The IEA reduced its demand estimates for almost every quarter until the end of next year. Air travel remained two-thirds lower than last year in July, normally a peak month due to holiday flights, it said in a monthly report.
The declining versions in the IEA report signaled that “oil prices are slightly ahead of the economic recovery,” said Michael Lynch, chairman of Strategic Energy & Economic Research. “It reflects a shift in sentiment from recovery to stagnant economic growth.”
However, the IEA said that world markets should tighten for the rest of the year with OPEC countries keeping production limited.
© Bloomberg
Futures retreat from a height of five months at noon from dire demand outlook
The IEA report followed a report by OPEC, which warned that its rivals in the US shale oil industry would be hit less hard by the market decline than previously expected. While the oil market is struggling to process a sustained overhaul of inventory, the pace of redundancies in global crude stocks will slow in August, September and more dramatically in October, according to Energy Aspects Ltd.
“The fundamental news about crude oil depletion in the United States is being met with increasing OPEC supply and reduced demand from agencies such as the IEA,” said Tom Finlon of GF International. “There are a lot of things that pull in different directions, and when that happens, markets get tied up.”
| West Texas Intermediate for September delivery declined 43 cents to settle at $ 42.24 a barrelBrent for October settlement fell 47 cents to end the session at $ 44.96 a barrel |
In a sign of weak demand demand, the U.S. average retail price for gasoline could fall back below $ 2 per gallon in the fourth quarter, especially in the event of a recurrence of Covid-19 cases and the flu, according to Auto -club AAA. Elsewhere, a majority-owned company owned by Royal Dutch Shell Plc said it would close a 110,000-barrel-a-day refinery in the Philippines.
“The foundations are not really there to see a major recovery” in raw futures, said Andrew Lebow, senior partner at Commodity Research Group. “There may well be some risks on the demand side, depending on the path of the virus.”
Still, physical markets show some strength. Mars Blend, a high-sulfur rat, traded at $ 1.40 a barrel above Nymex oil futures this week, the largest premium in more than a month before it claimed. Meanwhile, Light Louisiana Sweet crude traded at $ 1.80 a barrel over Nymex WTI futures this week, its highest premium in nearly three weeks but weakening on Thursday.
| The Organization of Petroleum Exporting Countries and its allies are delaying the Joint Ministerial Monitoring Committee by one day until August 19 due to the schedule of Russian Energy Minister Alexander Novak, according to delegates. Russia’s energy minister said the market was stabilizing and that OPEC + was not planning any sharp moves, according to Tass. Venezuela oil production could soon fall to near zero, according to IHS Markit Ltd. Crude production is now just 100,000 to 200,000 barrels per day, the consultant said in a report.Iran violated international law when its special forces intercepted a Liberian flag chemicals and oil product tanker in international waters on Wednesday, the U.S. 5th Fleet said in Bahrain in statement. |
Please visit us at bloomberg.com for more articles like this
© 2020 Bloomberg LP
Video: Gold’s record rally: Precious metals run 34% so far in 2020 (CNBC)
Click to expand
FOLLOWING
Continue reading
