Home / International/ Oil falls on fears of a global economic downturn

Oil falls on fears of a global economic downturn


Comments / {{hitsCtrl.values.hits}} Views / Tuesday, 13 August 2019 00:00


FILE PHOTO: Pump jacks operate at sunset in an oil field in Midland, Texas US  - Reuters

LONDON (Reuters): Oil prices fell on Monday amid worries about a global economic slowdown and the ongoing US-China trade war, which has reduced demand for commodities such as oil.

International benchmark Brent crude futures were at $58.00 a barrel by 1044 GMT, down 53 cents from their previous settlement.

US West Texas Intermediate (WTI) futures were at $53.69 per barrel, down 81 cents from their last close.

Both benchmarks fell last week, with Brent losing more than 5% and WTI falling about 2%.

Although the third quarter is fundamentally the strongest season for oil demand as drivers take to the roads for summer holidays, the trade dispute between the United States and China has weakened demand and reduced crude prices.

US President Donald Trump said on Friday he was not ready to make a deal with China and even called a September round of trade talks into question.

“The market is facing a buyers’ strike,” said Michael Tran, commodity strategist at RBC Capital Markets, noting the low level of investors’ long positions betting on higher prices.

“Despite the laundry list of disruptions and additional barrels at risk, investor length is currently near a multi-year low.”

The International Energy Agency (IEA) said on Friday mounting signs of an economic slowdown had caused global oil demand to grow at its slowest pace since the financial crisis of 2008.

Germany’s Ifo economic institute said its quarterly survey of nearly 1,200 experts in more than 110 countries showed that its measures for current conditions and economic expectations have both worsened in the third quarter.

However, Kuwait’s Oil Minister Khaled al-Fadhel said fears of a global economic downturn, which have pressured oil prices, were “exaggerated”, and global crude demand should pick up in the second half, helping to gradually reduce oil inventories.

OPEC members continue to cut production to drain global oil stocks, with the Saudis cutting more than their agreed quota, but analysts said more reductions were needed to support prices due to a fall in demand and non-OPEC supply growth next year.

“If OPEC cuts are merely extended through 2020, prices are going to fall further from current levels,” Bernstein Energy said in a note on Monday.

“We believe that OPEC needs to cut by a further one million barrels per day in 2020 if they are to defend oil prices at $60 a barrel.”

India’s imports of crude oil have also stalled in recent months, tallying with weaker economic growth in the country.


Share This Article

Facebook Twitter


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

A child’s guide to MCC Compact Sri Lanka

Monday, 18 November 2019

Intelligent children, unlike some of the adults, are curious, probing and questioning. They do not jump to conclusions until and unless they are convinced of facts that have been presented to them. Asani, a student in the Advanced Level class in a le


Re-thinking voting

Saturday, 16 November 2019

We use our vote (in a democracy) to elect those who should govern us. We can only be governed as long as we are alive. Therefore, our current age and life expectancy determine how long we have left to be governed! So, should the younger population, h


Ministry of Religious Affairs and Interfaith Harmony: A nation rich in unity

Friday, 15 November 2019

This series is based on business leader Dhammika Perera’s recently revealed ‘Economic Growth Strategy and Action Plan to increase GDP Per Capita from $ 4,000 to $ 12,000’. The document outlines goals and action plans for 23 ministries and to


Securing a People’s Constitution

Friday, 15 November 2019

The need for making a People’s Constitution has become a topic of interest not only among the public but also among some candidates of the Presidential Election. Rohan Pallewatte and Mahesh Senanayake have included it in their election manifestos.


Columnists More