Oil hits 7-week high
Oil’s rally stalled as traders weighed the threat Tropical Storm Barry poses to refineries on the U.S. Gulf Coast against prospects of an ongoing trade war and OPEC’s concerns over global demand.
Futures slipped for the first time in six sessions on Thursday, closing 0.4 per cent lower in New York. U.S. President Donald Trump tweeted that China wasn’t living up to promises to buy more American farm products. Meanwhile, more than half the oil output in the U.S. sector of the Gulf of Mexico was shuttered as companies evacuated deep-water platforms. Stocks also erased gains.
Oil has been rising amid growing Middle East tensions, with the British Navy intervening this week to stop Iran from blocking an oil tanker in the Persian Gulf. Yet OPEC on Thursday also released a weak market outlook for 2020, saying the surge in U.S. shale threatens to produce another supply surplus next year.
“We’ve priced in a lot of the concerns about the storm and Iran and the euphoria about the Fed, and I think traders are turning cautious,” said Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago.
OPEC, which recently agreed to extend supply restraints into 2020, said that it’s pumping about 560,000 barrels a day more crude than will be needed next year. Supplies from the group’s rivals will grow by more than twice as fast as world oil demand next year.
West Texas Intermediate crude for August delivery lost 23 cents to US$60.20 a barrel on the New York Mercantile Exchange. Brent for September lost 49 cents to US$66.52 on the ICE Futures Europe Exchange.
“The break above US$60 is likely to attract some additional short-term momentum, but if the storm passes in the Gulf of Mexico, we could see that fade away as the focus returns to demand worries,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen.
Other oil-market news:
- Gasoline futures fell 0.8 per cent to US$1.9895 a gallon.
- Saudi Arabia will pump less than 10 million barrels a day of crude in August and export fewer than 7 million a day, according to a person familiar with Saudi energy policy. Production will be little changed from July and previous months.
- The coming shake-up in shipping fuel from new environmental rules is spurring a surge in hedging and speculative trades in China.