Oil falls on concerns over rising supply | 2018-06-11 | daily-sun.com

Oil falls on concerns over rising supply

    10th June, 2018 10:29:34 printer

NEW YORK: Oil prices fell on Friday as concerns about surging US output and falling demand in China weighed on the contract and JP Morgan cut its price forecast.

Brent crude futures settled down 86 cents, or 1.1 per cent, at US$76.46 a barrel. US West Texas Intermediate (WTI) crude futures ended 21 cents lower at US$65.74 a barrel. For the week, Brent fell 0.5 per cent, while US crude slipped 0.3 per cent, report Agencies.

In the past three weeks, prices have declined from three-year highs as the market has contended with supply concerns. On Friday, oil prices came under pressure after data suggested Chinese demand was waning and concerns lingered about growing U.S. output. Hedge funds and other money managers cut their bullish bets on US crude futures in the week ended June 5, the US Commodity Futures Trading Commission (CFTC) said.

JP Morgan cut its 2018 crude forecast for WTI by US$3 to US$62.20 a barrel. The bank said geopolitical tensions and lingering risks of supply disruptions may push prices higher during the second half 2018, it expects prices will head lower late in the year, and remain capped in 2019.

The futures contracts dipped after the forecast was issued, and then pared losses.

China's May crude oil imports eased away from a record high hit the previous month, customs data showed, with state-run refineries entering planned maintenance.

May shipments were 39.05 million tonnes, or 9.2 million barrels per day (bpd). That compared with 9.6 million bpd in April.

Further weighing on prices has been rising U.S. output, which hit another record last week at 10.8 million bpd.

US drillers added one oil rig in the week to June 8, bringing the total count to 862, the highest level since March 2015, General Electric Co's Baker Hughes energy services firm said in its closely followed report.

The surge in US production has pulled down WTI into a discount versus Brent of more than US$11 a barrel, its steepest since 2015.

Despite Friday's decline, Brent remains more than 15 per cent above its level at the start of the year.

US investment bank Jefferies said the crude market is tight and spare capacity could dwindle to 2 per cent of demand in the second half of 2018, its lowest level since at least 1984.

Markets have been tightened by supply trouble in Venezuela, where state-owned oil company PDVSA is struggling to clear a backlog of about 24 million barrels of crude waiting to be shipped to customers.