Sun, Sep 01, 2019 - Page 14 News List

Oil extends fall for worst month since May


Oil on Friday extended its biggest monthly decline since May as concern over US-China trade tensions outweighed signs that OPEC’s supply cuts are trimming stockpiles.

Futures fell 2.8 percent in New York, extending last month’s slide to almost 6 percent.

Concerns about demand for swelling US production have been stoked as China prepared to start taxing US oil from today. US oil explorers, even as they cut drilling to a 19-month low, are producing record volumes of crude.

“It’s simply positioning ahead of the long weekend,” Mizuho Securities USA futures director Bob Yawger said in New York.

“If you were long, would you want to go home this weekend still long, with really no idea what kind of twitter feed the POTUS [president of the United States] is going to unload while you hanging out at the beach bar?” he added.

Oil remains under pressure as the outlook for the global economy continues to be weak and the US pumps out crude at record-high levels.

Furthermore, Russia earlier said that it was cutting production, but not as much as it had agreed to with OPEC and its allies. At the same time, there are signs that inventories are being drawn down.

US stockpiles fell in the week ended Aug. 23 to the lowest level since November last year, government data showed.

Beijing’s impending 5 percent tariff on US oil is particularly responsible for the recent weakness in West Texas Intermediate relative to Brent.

The US benchmark was fetching a US$5.49 per barrel discount to its global counterpart, the widest in nearly a month.

“The wider spread is a sign of the trade war,” said Rob Haworth, who helps oversee US$151 billion at US Bank Wealth Management in Seattle.

Chinese buyers would have to find alternatives, as US oil has become more expensive, he said.

“That will push up Brent prices, while weakening US oil,” he added.

West Texas Intermediate for delivery next month sank US$1.61 to settle at US$55.10 per barrel on the New York Mercantile Exchange.

Brent for settlement next month, which expired on Friday, fell US$0.65 to US$60.43 per barrel on the ICE Futures Europe Exchange. The more-active November contract sank US$1.24 to US$59.25.

Traders are also keeping an eye on Hurricane Dorian, which was expected to become a Category 4 storm and make landfall on Florida’s east coast, the first major hurricane to hit the area in 15 years.

Threats of the storm had already forced Chevron Corp to remove some nonessential staff from two of its platforms in the Gulf of Mexico.

In other energy trading, wholesale gasoline fell US$0.07 to US$1.61 per gallon and heating oil declined US$0.03 to US$1.83 per gallon, while natural gas fell US$0.01 to US$2.29 per 1,000 cubic feet.

Gold fell US$7.40 to US$1519.10 per ounce and silver rose US$0.02 to US$18.19 per ounce, while copper fell US$0.03 to US$2.53 per pound.

Additional reporting by AP

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