Oil down as EM rout threatens demand


Sun, Sep 09, 2018 - Page 14

Oil posted the biggest weekly decline since July as a rout in emerging markets (EM) raised concerns about weakening energy demand.

Futures in New York fell for a third straight session on Friday after a week-long slide in developing markets around the globe.

The US dollar advanced after US employers added more jobs than expected, diminishing the appeal of commodities priced in the greenback.

“This whole emerging market situation is sapping a lot of energy from commodity markets,” Bart Melek, head of global commodity strategy at TD Securities in Toronto, said by telephone.

“Risk appetites have waned somewhat. That’s not particularly good,” he said.

The protracted trade dispute between the US and China has cast a shadow over prospects for the economic growth that fuels energy demand.

The bearish sentiment has been tempered somewhat by fears that US sanctions against Iran might cripple supplies from OPEC’s No. 3 exporter.

West Texas Intermediate (WTI) for October delivery fell US$0.02 to settle at US$67.75 a barrel on the New York Mercantile Exchange. Prices ended the week down 2.9 percent for the biggest weekly drop since the middle of July. Total volume traded was about 18 percent below the 100-day average.

Brent for November settlement on Friday rose US$0.33 to US$76.83 on the ICE Futures Europe exchange. The contract is up 3.3 percent for the week.

The global benchmark crude traded at a US$9.28 premium to WTI for the same month.

Oil market news:

‧Gasoline futures rose US$0.019 to US$1.97 a gallon in New York.

‧Airlines are starting to hedge against the risk that fuel prices could be driven higher by rules targeting the shipping industry’s environmental performance.

‧The crisis in emerging economies might affect oil demand, but it would not be a major factor and the International Energy Agency expects the market to tighten.