Oil turns lower as weaker demand outlook weighs

Oil turns lower as weaker demand outlook weighs

Crude prices dropped by the largest amount since July this week, decreasing by an average of 4-5% week-on-week despite a moderate rebound on Friday as the IEA alleviated concerns that the market will not be able to compensate for disappearing Iranian volumes.

The Organization of the Petroleum Exporting Countries (OPEC) cut its forecast of global demand growth for oil next year for a third straight month, citing headwinds facing the broader economy from trade disputes and volatile emerging markets.

U.S. West Texas Intermediate (WTI) crude futures were up 75 cents, or 1.1 percent, at $71.72 a barrel, after a 3 percent fall in the previous session. The rapid increase in prices was more about perception of a supply shortage than real fundamentals, he said.

Crude was still heading for its first weekly drop in five weeks, pressured by a big rise in U.inventories and fading concerns for now about looming USA sanctions aimed at cutting Iran's oil exports.

Oil stockpiles in the world's biggest economy are swelling amid International Energy Agency warnings about growing threats to global energy demand.




Today's elevated oil prices partly reflect very high crude runs 100 during recent months and also supply fears as sanctions against Iran draw near.

The IEA report is the latest official forecaster to predict weaker demand ahead and conclude that supply is adequate. Opec made a similar move on Thursday.

'The bearish alarm bells are ringing for next year's oil balance as market players brace for the return of a supply surplus, ' said Stephen Brennock of oil broker PVM. New data for OECD stocks show that in August they increased by a more- than-normal 16 mb and have been relatively stable for several months after falling significantly following the implementation of the original Vienna Agreement. The $70 level underneath was massive resistance, and it looks as if we are getting ready to revisit that level to try to find buyers. The speculator group cut its combined futures and options position in NY and London by 36,652 contracts to 296,456 during the period. The Bloomberg Commodity Index had its first back-to-back drop in three weeks on Thursday as oil and aluminum prices plunged, and is on course for the first weekly drop in four weeks.

In the U.S. Gulf of Mexico, producers had cut output by 40 percent on Thursday due to Hurricane Michael, according to the Bureau of Safety and Environmental Enforcement, even as some operators began returning crews to offshore platforms.

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