Wednesday, 17 September 2014 01:03
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Weaker oil demand growth in China and Europe - IEA
Step up in sanctions against Russia will impact demand
U.S. market bearish on stock build as maintenance season hits
Reuters: Crude oil prices fell on Friday on pressure from weak demand, ample supplies and a strong dollar.
Taking what traders called a “wild ride,” U.S. crude prices fell in the morning but reversed course to hold higher for most of the afternoon, only to fall again by settlement.
Analysts said prices seemed to have found temporary support above $92 a barrel, after major sell-offs a day earlier pushed them to a 16-month low.
“We’ve seen a lot of selling pressure lately and concerns of a lot of oil on hand to meet demand,” said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. “I’m not sure if we’ve found our bottom yet, but we’ve wiped out more than $16 in the last few months and a lot of the fears have been priced in for now.”
Some traders cited expectations that U.S. crude stocks will rise in coming weeks during refinery maintenance season. Last week, U.S. refinery runs reached their highest rate since Aug. 2005, according to U.S. data.
ICE Brent futures for October fell 97 cents to settle at $97.11 a barrel, the biggest weekly loss since the week to July 11. The contract expires on Monday, adding to pressure as traders roll positions. The November contract fell 90 cents to $97.96 a barrel.
U.S. crude fell 56 cents to settle at $92.27 a barrel. Brent’s premium over U.S. crude <CL-LCO1=R> narrowed to$4.84.
During the day, the arb touched as low as $4.15, the narrowest intraday arbitrage since April 14.
While WTI outperformed Brent on the day, recent moves may signal a supply draw at Cushing next week, according to a note from oil advisory Ritterbusch and Assoc.
“However, we still feel that en masse liquidation out of Brent-WTI spreads has been a huge driver of WTI’s $3 rebound after establishing fresh 16-month lows early yesterday.”
“I think there’s a lot of back-and-forth going on in the market on what’s going to happen next,” said Carl Larry, chief executive of consultancy Oil Outlooks in Houston, Texas.
“People think that refinery runs will be cut and that’s going to back up crude to the system. On the other hand, I think OPEC will have to make a decision about production soon that’ll keep prices supported here.”
The dollar index was on track for its ninth straight week of gains, the longest streak since 1997. A stronger dollar can crimp demand for dollar-based commodities, making them more expensive for users of other currencies..
Oil slid during European trading despite confirmation that new U.S. sanctions will hit development of Russia’s Arctic and deepwater energy resources.
This week’s sell-off brought Brent futures to two-year lows. Brent remains down more than 15 percent since a peak in the middle of June.
On Thursday, the International Energy Agency’s (IEA) monthly report said weaker consumption in China and Europe had caused global oil demand growth to soften at a remarkable pace.
Also, Libyan production has surpassed 800,000 bpd and is expected to hit 1 million bpd in October.
