Oil prices fall a signs of slowing USA demand, economic concerns

Daniel Fowler
July 5, 2019

USA crude futures for August delivery were up 24 cents at $56.49 a barrel.

Oil slumped 4.8% on Tuesday for its worst decline following a meeting by the Organization of Petroleum Exporting Countries in four years.

Oil prices fell on Thursday, weighed down by data showing a smaller-than-expected draw on US crude stockpiles and worries about the global economy. The Organisation of the Petroleum Exporting Countries and other producers such as Russian Federation, a group known as OPEC+, agreed on Tuesday to extend oil supply cuts until March 2020 as members overcame differences to try to prop up prices.

Futures fell as much as 1.2% in NY after gaining 1.9% on Wednesday.

Arguably, the most disturbing news about commodities in general moving forward was delivered by Mary Ann Bartels, head of ETF strategy at Bank of America-Merrill Lynch; she told CNBC television that "I think one of the biggest risks that doesn't get talked enough about.is that commodities have gone into a bear market, and what I mean by that is they've gone into a trading range that can last several more years".

"The weakness in US and Chinese data early in the week, together with yesterday's smaller-than-expected draw, only added to demand worries".

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September Brent crude futures were up 65 cents at $63.05 a barrel. The benchmark global crude traded at a premium of $6.31 to WTI for the same month.

USA crude inventories shrank by 1.09 million barrels last week, according to the Energy Information Administration. That compared with analyst expectations for a decrease of 3 million barrels.

"Global growth remains the main factor holding back crude prices", said Alfonso Esparza, senior analyst at OANDA. US domestic output increased to 12.2 million barrels a day last week, resuming gains after dropping since the start of June, the EIA said.

A day after the American Petroleum Institute's predicted a 5-million-barrel crude oil stock draw and failed to reverse oil costs' fall.

Markets appeared largely unmoved by the detention by British Royal Marines of a supertanker in Gibraltar possibly carrying Iranian crude oil bound for Syria, as tensions between Iran and the United States have flared over mysterious attacks on tankers in the Gulf of Oman in recent months.

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