Sun, Oct 06, 2019 - Page 14 News List

Oil records worst week in months due to pessimism

Bloomberg

Oil registered its biggest weekly decline since July as a streak of disappointing economic data compounded fears about a global recession.

The 0.7 percent rise in New York-traded futures on Friday was not enough to correct a 5.5 percent drop for the week. Rising US payrolls and the lowest unemployment rate in five decades undercut prospects of interest-rate cuts by the US Federal Reserve.

“The relative strength of the jobs report throws cold water on concept that the Fed will cut rates,” Mizuho Securities USA futures division director Bob Yawger said.

Oil has been under pressure all week from a series of gloomy US economic data. A key measure of US service-industry activity dropped to the lowest in three years, while an employment gauge registered its weakest reading in more than five years.

West Texas Intermediate (WTI) for November delivery rose US$0.36 to settle at US$52.81 a barrel on the New York Mercantile Exchange, down 3.8 percent for the week.

Brent for December delivery increased US$0.66 to settle at US$58.37 on the ICE Futures Europe Exchange, down 4.4 percent for the week.

It traded at a US$5.63 premium to WTI for the same month.

Signs of economic deterioration in the US, China and Germany are worsening an already fragile consumption outlook for fuels.

OPEC member Nigeria on Thursday said that oil demand would be “very challenging” next year.

Those concerns, combined with quick repairs at damaged Saudi Arabian oil installations, have evaporated oil’s gains following the Sept. 14 bombardment of the kingdom.

“Oil markets are focusing on severe macro risks, but are also shrugging off the most heightened geopolitical risk in years,” Citigroup Inc analyst Ed Morse wrote in a report. “As markets shed just about any consideration of supply risk, attention stays focused on what is nearly universally expected to be a significantly weaker year of demand growth.”

Washington and Beijing are set to restart high-level trade negotiations next week, but the chances of a short-term breakthrough do not appear to be high.

Meanwhile, the US this week imposed tariffs on European goods including aircraft and dairy products.

Drilling rigs targeting crude in US fields fell by three to 710 last week, the lowest since May 2017, Baker Hughes Inc reported Friday.

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