Sun, Mar 24, 2019 - Page 14 News List

Oil falls most in three weeks on fears of slowing growth

Bloomberg

An oil rig is pictured off the coast of Pengerang, Malaysia, on Feb. 26.

Photo: Reuters

Oil on Friday fell the most in three weeks as disappointing economic data sowed new fears of slowing global growth.

West Texas Intermediate (WTI) futures in New York dropped 1.6 percent Friday, paring the week’s gain to less than 1 percent.

Weaker-than-expected manufacturing data from Germany and France cast fresh doubts on Europe’s economic outlook, dragging equities down.

The US Treasury yield curve for three-month and 10-year yields spread inverted on Friday morning for the first time since the financial crisis in 2007, a move widely seen as a reliable harbinger of recession in the US.

“Have the fundamentals all of a sudden gone badly today? Probably not,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto. “The fundamentals on the supply side of the equation look pretty much as they did yesterday, so I think a lot of this is profit-taking and a response to this pretty severe downturn in risk appetite.”

Oil has gained about 30 percent this year, and a two-week rally saw prices climb above US$60 a barrel in New York on Wednesday for the first time this year.

Prices have been supported by OPEC and its allies reaffirming their commitment to supply cutbacks, and ongoing disruptions in Venezuela and Iran have also squeezed supplies.

However, the concerns over slowing global growth and the ongoing US-China trade dispute have also capped rallies.

“The French and German PMIs were both just abysmal,” said Bob Yawger, director of the futures division at Mizuho Securities USA in New York. “We were trading at US$60 until the eurozone data started coming out, so it’s definitely a perception on demand and has nothing to do with supply-side economics this morning.”

WTI for May delivery lost US$0.94 to settle at US$59.04 a barrel on the New York Mercantile Exchange, up 0.88 percent from last week’s US$58.52 a barrel.

Brent for May settlement on Friday fell US$0.83 to settle at US$67.03 a barrel on the London-based ICE Futures Europe exchange. The contract is down 0.2 percent for the week.

Until Friday, oil had been supported by bullish news on the supply side.

The US Energy Information Administration said that crude stockpiles last week dropped by the most since July last year, defying analysts’ forecasts for a 1.75 million-barrel increase.

However, they are still near the five-year average for this time of the year, suggesting growing shale output still risks undermining OPEC and its partners’ efforts to cap production.

Saudi Arabian Minister of Energy Khalid Al-Falih said “OPEC plus” remains committed to curbing output when the Joint Ministerial Monitoring Committee met on Monday.

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