Oil prices edge higher as financial markets pare some losses
By Devika Krishna Kumar NEW YORK (Reuters) - Oil prices edged higher on Thursday and Brent hit the highest level this year, but gains were capped after the steepest decline in U.S. retail spending since 2009 heightened investor fears of a global economic slowdown. U.S.
By Devika Krishna Kumar
NEW YORK (Reuters) - Oil prices edged higher on Thursday and Brent hit the highest level this year, but gains were capped after the steepest decline in U.S. retail spending since 2009 heightened investor fears of a global economic slowdown.
U.S. financial markets opened lower and global stock markets erased broad gains after retail sales in the world's largest economy recorded their biggest drop in more than nine years in December.
The U.S. economy's outlook was further dimmed by other data showing an unexpected increase in the number of Americans filing claims for unemployment benefits last week. [.N]
"Oil prices sold off in reaction to the very weak retail sales data in the U.S. that drove selling across-the-board," said John Kilduff, a partner at Again Capital Management in New York.
"Once again, the weak demand narrative is outweighing some of the other supportive factors on the supply side."
Prices clawed back gains after stock markets pared some losses and also drew support from investor optimism that the United States and China could resolve their trade dispute.
Brent futures were up 75 cents, or 1.2 percent, at $64.36 a barrel by 12:32 p.m. EST (1732 GMT), after hitting a 2019 high of $64.81, while U.S. crude rose 41 cents, 0.8 percent, to $54.31 a barrel, down from a session high of $54.68.
The price of crude has gained nearly 20 percent this year, driven primarily by the prospect of a decline in oil supply from the Organization of the Petroleum Exporting Countries and other top exporters such as Russia.
The producer group known as OPEC+ has agreed to cut crude output by a joint 1.2 million barrels per day. Top exporter Saudi Arabia said it would cut even more in March than the deal called for.
"While medium-term trends pose some challenges, we still see a balanced oil supply/demand outlook this year. Brent should average $70 in 2019, helped by voluntary (Saudi, Kuwait, UAE) and involuntary (Venezuela, Iran) declines in OPEC supply," Bank of America analysts said in a note.
Oil prices also drew support from a surprise increase in China's exports in January and a sharp rise in imports of crude oil before the Lunar New Year holidays in February.
However, in physical markets, the steep rise in availability of U.S. shale oil is leading to a build in domestic inventories of crude and in refined products.
Government data on Wednesday showed U.S. crude stocks last week rose to their highest since November 2017 as refiners cut runs to the lowest since October 2017.[EIA/S]
(Additional reporting by Amanda Cooper and Alex Lawler in London, Henning Gloystein in SINGAPORE and Colin Packham in SYDNEY; Editing by Marguerita Choy and Edmund Blair)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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