Published: Fri, August 09, 2019
Markets | By Erika Turner

Weaker dollar, possible producer action buoy oil prices after 4% slump

Weaker dollar, possible producer action buoy oil prices after 4% slump

Prices have lost 24.5% since their 2019 peak in April.

Oil prices steadied on Wednesday after falling at the start of the session, with the potential for damage to the global economy and fuel demand from the intensifying China-US trade dispute continuing to cast a shadow over the market.

"Oil prices have clawed back some losses, but the sentiment remains overly bearish", Stephen Innes, managing partner at VM Markets, said in a note.

Investors considering USO or other oil exchange-traded products have several factors to consider, including the Organization of Petroleum Exporting Countries (OPEC).

USA crude oil inventories are roughly 2% above the five-year average for this time of year.

Brent crude futures LCOc1 settled down $2.71, or 4.6%, at $56.23 a barrel, the lowest close since early January.

Petroleum prices tumbled more than 4% on Wednesday to new summertime lows, extending recent heavy losses following a surprise build in USA crude stockpiles. Weak demand in established markets is spurring the company to focus on emerging economies, he said.

Mexico urges tighter USA gun control after deadly El Paso shooting
Ebrard urged the U.S. to establish a "strong position against hate crimes" following the shooting. This would give Mexican prosecutors access to information about the case, Ebrard said.

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 1.50 million barrels, EIA said.

A pump jack operates in the Permian Basin oil and natural gas production area near Odessa, Texas, U.S., February 10, 2019.

This week, the EIA reduced its forecast USA demand for crude and liquid fuels, also cutting its forecast for global crude and liquids consumption by 0.1% for both 2019 and 2020.

After seven weeks of consecutive crude drawdowns, "there was a thought that today's report would turn oil's fortunes around", said John Kilduff, partner at Again Capital LLC in NY.

Tensions ramped up over the past week as President Trump communicated his intent to impose 10 percent tariffs on the remaining $300 billion worth of goods coming into the US from China. At 438.9 million barrels, US crude oil inventories are about 2% above the five year average for this time of year, according to the EIA crude oil and petroleum weekly storage data, reporting inventories as of August 2, 2019.

The agency also cut its forecast for global crude and liquids consumption by 0.1% for both 2019 and 2020.

The U.S. Maritime Administration said U.S. -flagged commercial vessels should send their transit plans for the Strait of Hormuz and Gulf waters to U.S. and British naval authorities, and that crews should not forcibly resist any Iranian boarding party.

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