Oil prices edge up off three-month lows, but demand concerns persist

By Stephanie Kelly NEW YORK (Reuters) - Oil futures on Wednesday clawed back some of the losses they sustained in the previous session, but a rebound in COVID-19 cases in some countries undermined hopes for a steady recovery in global demand. Brent crude rose $1.01, or 2.5%, to settle at $40.79 a barrel. The benchmark dropped more than 5% on Tuesday to fall below $40 for the first time since June.

Reuters September 10, 2020 03:05:35 IST
Oil prices edge up off three-month lows, but demand concerns persist

Oil prices edge up off threemonth lows but demand concerns persist

By Stephanie Kelly

NEW YORK (Reuters) - Oil futures on Wednesday clawed back some of the losses they sustained in the previous session, but a rebound in COVID-19 cases in some countries undermined hopes for a steady recovery in global demand.

Brent crude rose $1.01, or 2.5%, to settle at $40.79 a barrel. The benchmark dropped more than 5% on Tuesday to fall below $40 for the first time since June.

U.S. crude rose $1.29, or 3.5% to settle at $38.05 a barrel, having fallen nearly 8% in the previous session.

That lifted the major benchmarks off Tuesday's levels near three-month lows. Prices fell this week after Saudi Arabia's state oil company Aramco cut the October official selling prices for its Arab light oil, a sign of softening demand.

"When strong Middle Eastern producers are willing to sell-off in lower prices, it is normal that the global market panics and follows suit," said Paola Rodriguez-Masiu, Rystad Energy's senior oil markets analyst.

The global health crisis continues to flare with coronavirus cases rising in India, Britain, Spain and several parts of the United States. The outbreaks are threatening to slow a global economic recovery and reduce demand for fuels from aviation gas to diesel.

"Short-term oil market fundamentals look soft: the demand recovery is fragile, inventories and spare capacity are high, and refining margins are low," Morgan Stanley said.

Record supply cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, have helped support prices, but with grim economic figures being reported almost daily, the outlook for demand for oil remains bleak.

The U.S. Energy Information Administration on Wednesday cut its 2020 world oil demand growth forecast by 210,000 barrels per day to 8.32 million bpd.

China's factory gate prices fell for a seventh straight month in August although at the slowest annual pace since March, suggesting industries in the world's second-biggest economy continued their recovery from the coronavirus-induced downturn.

In the United States, crude inventories rose 3 million barrels last week to 504.1 million barrels, industry data from the American Petroleum Institute showed late Wednesday. Analysts had expected a draw of 1.3 million barrels.

U.S. government inventory data is due on Thursday, delayed a day by Monday's Labor Day holiday. [EIA/S]

U.S. crude oil production is expected to fall 870,000 bpd to 11.38 million bpd this year, a less steep decline than previously forecast, the U.S. government said in its latest monthly outlook.

Further oil production cuts are expected in 2021, according to the report.

(Reporting by Stephanie Kelly in New York, additional reporting by Ahmad Ghaddar in London and Aaron Sheldrick in Tokyo; Editing by Marguerita Choy and David Gregorio)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.