FILE PHOTO: A drilling rig of Austria’s oil and gas group OMV is seen at their exploratory drilling site near Maustrenk, Austria October 9, 2018. REUTERS/Leonhard Foeger/File Photo
September 26, 2019
By Roslan Khasawneh
SINGAPORE (Reuters) – Oil prices edged lower on Thursday, extending losses from the previous two sessions, as Saudi Arabia quickly regained production volumes after an attack on its oil facilities and amid increasing signs of slowing demand.
Brent crude <LCOc1> futures were at $62.36 a barrel, down 3 cents, or 0.1%, from the previous close, by 0659 GMT.
U.S. West Texas Intermediate (WTI) crude futures <CLc1> were 9 cents lower, or 0.2%, to $56.40 a barrel.
Brent and WTI prices have dropped 3.7% and 3.8%, respectively, since their close on Monday, weighed down by a surprise 2.4 million-barrel build in U.S. crude inventories last week, and a faster-than-expected recovery of Saudi output capacity after the Sept. 14 attacks on two of its oil processing plants.
Prices found slight support on hopes that the U.S.-China trade dispute may ease, potentially boosting oil demand.
U.S. President Trump said on Wednesday – a day after a stinging rebuke to China for its trade practices – that Beijing wanted to make a deal “very badly” and that a deal “could happen sooner than you think”.
Trump and Japanese Prime Minister Shinzo Abe also signed a limited trade deal that would open up Japanese markets to some $7 billion worth of U.S. products annually.
Analysts said there was little else besides the slightly more positive outlook on the trade talks to help lift crude futures higher.
“There’s not too much to be cheery about on oil markets today,” said Jeffrey Halley, senior market analyst for Asia Pacific at OANDA.
“Saudi Arabia is restoring production much faster than expected (and) the EIA crude inventories came in higher,” he said.
Both Brent and WTI on Wednesday fell to their lowest since the attacks on Saudi Arabia.
Crude futures were also pressured by sluggish economic data in leading European economies and Japan, analysts said.
“Fundamentally, a much weaker than expected Germany manufacturer PMI data painted a tepid outlook for energy demand,” said Margaret Yang, market analyst at CMC Markets.
“This bearish outlook is further strengthened by a rise in U.S. crude oil stockpile in the past weeks,” said Yang.
A firmer dollar <.DXY>, which posted its sharpest daily gain in three months overnight and held steady in Asian trade, also weighed on oil prices as it makes dollar-traded fuel imports more costly for countries using other currencies.
“Barring new inputs to adjust price expectations, both contracts are in grave danger of fully unwinding their Saudi attack rallies and retesting their pre-attack lows, around $60.00 (for Brent) and $54.00 (for WTI),” Halley said.
(Reporting by Roslan Khasawneh; Editing by Christian Schmollinger and Tom Hogue)
