Economy

Global Economic Slowdown Puts Pressure On Oil Prices

Global Economic Slowdown Puts Pressure On Oil Prices

U.S. WTI settled +1.8% to $52.59/bbl and Brent futures finished +1.7% at $61.67/bbl, and both benchmarks are rallying almost 3% in post-settlement trade. WTI was down $2.19, or 4.1 per cent, at $51.29 a barrel. Stockpiles jumped despite refineries increasing activity and as US crude imports jumped by more than 1 million barrels per day.

Brent futures settled down $1.34, or 2.2%, at $60.63 a barrel. It sunk earlier to a five-month low of $59.45.

US crude oil production rose to a record 124.4 million barrels per day (bpd) in the week to May 31, the Energy Information Administration (EIA) said on Wednesday, an increase of 1.63 million bpd since May 2018.

Crude oil prices plunged on Wednesday after the EIA reported a weekly build in crude oil inventories of 6.8 million barrels.

In an escalation of the trade tensions, Washington on May 10 increased additional tariffs on 200 billion USA dollars' worth of Chinese imports from 10 percent to 25 percent, and has threatened to raise tariffs on more Chinese imports.

A day earlier, the American Petroleum Institute (API) estimated inventories had gone up by 3.545 million barrels last week, with gasoline inventories also swelling.

The crude oil prices advanced during Tuesday's trading sessions on the exchanges of London and New York, Kazinform correspondent reports.

"The calendar at this time of year usually produces draws as crude is refined to gasoline", Zahir said. -China trade war and President Donald Trump's threats last week to place tariffs on Mexican imports.

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"There is no shortage of crude oil inventories". Traders are waiting for positive news to start buying futures again.

By then, both contracts were in bear-market territory, having lost more than 20% from peaks reached in late April.

(GRAPHIC-U.S. oil drilling, production & storage levels link: tmsnrt.rs/2DxgF8W).

Signals of slowing global economic activity have increased in recent months, fueled by trade tensions between the United States and China, the world's top two energy consumers. Optimism over US trade relations with Mexico are also providing some support.

The 14-member OPEC and its 10 allies led by Russian Federation are due to met in Vienna on June 25 to discuss further production cuts to balance the market.

US stocks, which oil prices tend to follow, spiked after Bloomberg News reported the United States is considering a delay in the tariffs as talks continue.

"Does it make sense (for Russia) to reduce (oil output) if the USA immediately takes (our) market share?" said Sechin, who added that Russian oil companies should be allowed to pump at will or be compensated by Moscow for the cuts they are making.