Oil prices hold at 14-month low as demand worries offset big US storage withdrawal
Shafaq News/Oil prices held at a 14-month low on Thursday as worries about demand in theU.S. and China and a likely rise in supplies out of Libya offset a bigwithdrawal from U.S. inventories and a delay to output increases by OPEC+producers.
Brentfutures were down 1 cent to settle at $72.69 a barrel, while U.S. West TexasIntermediate (WTI) crude fell 5 cents, or 0.1%, to settle at $69.15.
That was thelowest close for Brent since June 2023 for a second day in a row and the lowestclose for WTI since December 2023 for a third day in a row.
The U.S.Energy Information Administration said energy firms pulled 6.9 million barrelsof crude out of storage during the week ended Aug. 30. ,
That wasmuch bigger than the draw of 1 million barrels analysts forecast in a Reuterspoll, but was in line with the draw of 7.4 million barrels reported by theAmerican Petroleum Institute industry group on Wednesday.
Furthersupport came from discussions between the Organization of the PetroleumExporting Countries and allies led by Russia, known collectively as OPEC+,about delaying output increases due to start in October.
OPEC+ agreedto delay a planned oil output increase for October and November, and said itcould further pause or reverse the hikes if needed.
Analysts atU.S. investment banking firm Jefferies said the OPEC+ decision has the effectof tightening fourth-quarter balances by about 100,000-200,000 barrels per day(bpd) and should be sufficient to prevent material builds even if demand fromChina does not improve.
Bob Yawger,director of energy futures at Mizuho, however, said the market was notimpressed with the OPEC+ news.
"Thegasoline market would be capable of cratering crude oil even if the OPEC+ chaoswas not leaning on (the) price. If you don’t need the gasoline, you don’t needthe crude oil to make gasoline," Yawger said.
After energyfirms added a surprise 0.8 million barrels of gasoline to U.S. stockpiles lastweek, U.S. gasoline futures fell to their lowest close since March 2021.
In Libya,some tankers were being allowed to load crude from the OPEC member's storageeven though output remained curtailed amid a political standoff over thecentral bank and oil revenue.
CONFLICTINGUS DATA
The latestU.S. economic data offered some relief about the health of the economy to amarket looking for clues about the path of the Federal Reserve interest ratecuts.
The Fedhiked rates aggressively in 2022 and 2023 to tame a surge in inflation, but iswidely expected to reduce borrowing costs at its Sept. 17-18 policy meeting.Lower rates can boost economic growth and demand for oil.
U.S.services sector activity was steady in August, but employment gains slowed,remaining consistent with an easing labor market.
Meanwhile,U.S. private job growth hit a 3-1/2-year low in August and data for the priormonth was revised lower, potentially hinting at a sharp labor market slowdown.
By contrast,the number of Americans filing new applications for jobless benefits declinedlast week as layoffs remained low.
"In ourview, the 'Beige Book' suggests that the economy is already growing at abelow-trend pace and that recession risks are rising," analysts at UBSsaid in a note, referring to the release on Wednesday of a Fed report that actsas a temperature check on the health of the economy about every six weeks.
(Reuters)
