Oil pump jacks are seen at the Vaca Muerta shale oil and gas field in the Patagonian province of Neuquén, Argentina, on January 21, 2019. Reuters/Agustin Markarian/File Photo Licensing Rights Receive
- Dollar firms up on solid US data
- Mixed Chinese data, possibly weighing on weak winter demand
- Rising oil production from Iran, Venezuela also keeps prices under control
- US crude oil stockpiles fall for the fourth consecutive week – EIA
HOUSTON, Sept 7 (Reuters) – Global benchmark Brent crude oil fell below $90 a barrel in volatile trade on Thursday, halting a nearly two-week rally as many warned of weaker demand in the coming months.
Brent crude futures were down 68 cents, or 0.8%, at $89.92 a barrel after trading between $89.46 and $90.89.
US West Texas Intermediate crude (WTI) futures fell 67 cents, or 0.8%, to $86.67 a barrel after trading between $86.39 and $87.74.
Thursday’s fall came after nine consecutive sessions of gains in WTI and seven consecutive sessions of gains in Brent.
Prices also rose earlier in the week after the world’s top two oil exporters Saudi Arabia and Russia extended voluntary supply cuts until the end of the year. These were on top of April cuts agreed by several OPEC+ producers to last until the end of 2024.
“Crude futures are feeling some corrective pressure from a new high in the US dollar index as well as weaker economic data from the euro area, where economic activity grew 0.1% versus 0.3%,” said Dennis Kiesler, Senior Vice President ” Trading in BOK Financial.
The dollar edged higher, sending the yen to a 10-month low and the euro and sterling to their weakest levels in three months, as investors raised their bets on a still-resilient US economy. A stronger dollar pushes up the cost of greenback-denominated oil purchases for holders of other currencies.
John Kilduff, partner at Again Capital, said: “As soon as I start looking down the road a little bit the signs say stop.”
Market participants also digested mixed data from China. Overall exports fell 8.8% year-on-year in August and imports shrank 7.3%. But the import of crude oil increased by 30.9%.
“The rally has been deflated overnight as Chinese product exports surged last month, although crude imports rose,” said PVM Oil analyst Tamas Varga.
Worries about rising oil production from Iran and Venezuela, which could offset in part on cuts from Saudi and Russia, also kept pressure on the market.
However, US demand remained strong, as crude stockpiles fell by 6.3 million barrels last week, falling for a fourth week in a row and more than 6% in the past month, government data showed.
“At the moment, it’s really difficult for us to see any downside because of the lack of supply,” said Leon Li, a Shanghai-based analyst at CMC Markets.
“However, we need to consider potential demand risks such as in the fourth quarter, the market may slow down in the off-peak season for oil consumption after summer demand ends.”
Reporting by Irwin Seba in Houston; Additional reporting by Arathi Somashekar in Houston; Ahmed Ghadar in London; Editing by Trixie Yap, Marguerita Choy, Frances Carey, Nick McPhee in Singapore
Our Standards: The Thomson Reuters Trust Principles.
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Source: www.reuters.com
