Oil has steepest drop in a month as economic concerns threaten demand
Oil prices fell more than 2 percent on Thursday, with Brent slipping back from four-month highs as investors focussed on the risk that emerging market crises and trade disputes could dent demand even as supply tightens.
The International Energy Agency warned that although the oil market was tightening at the moment and world oil demand would reach 100 million barrels per day (bpd) in the next three months, global economic risks were mounting.
"As we move into 2019, a possible risk to our forecast lies in some key emerging economies, partly due to currency depreciations versus the U.S. dollar, raising the cost of imported energy," the agency said.
"In addition, there is a risk to growth from an escalation of trade disputes," the Paris-based agency said.
Brent crude oil
U.S. light crude
Both benchmarks marked their biggest single day percentage drop in almost one month.
The market tumbled early in the session as investors focussed on the bearish elements of the IEA report, said Bob Yawger, director of energy futures at Mizuho in New York.
Prices slipped again after U.S. President Donald Trump said in a tweet that the United States was under no pressure to make a trade deal with China, Yawger said.
U.S. companies in China are being hurt by mounting trade tensions between Washington and Beijing, according to a survey, prompting U.S. business lobbies to urge the Trump administration to reconsider its approach.
The White House has invited Chinese officials to restart trade talks as it prepares to escalate a trade war with China with tariffs on $200 billion worth of Chinese goods.
(GRAPHIC: Iran oil exports to Asia - https://tmsnrt.rs/2CEzade)
U.S. Energy Secretary Rick Perry praised members of the Organization of the Petroleum Exporting Countries and Russia for their work in preventing a spike in oil prices during a visit to Moscow.
Oil prices were up on the week, buoyed in earlier sessions by a larger-than-expected draw in U.S. crude inventories, weakness in the U.S. dollar and a reported fall in U.S. production, Commerzbank said in a note. [EIA/S]
U.S. crude production
Though weekly output slipped, the United States likely surpassed Russia and Saudi Arabia earlier this year to become the world`s largest crude oil producer, based on preliminary estimates from the Energy Information Administration.
Although the EIA does not publish crude production forecasts for Russia and Saudi Arabia in its short term outlook, it expects that U.S. output will continue to exceed Russian and Saudi production for the remaining months of 2018 and through 2019.
(GRAPHIC: U.S. oil production growth is stalling - https://reut.rs/2CPGl2p)
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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