Oil edges further above $80 but weaker demand view weighs

Ann Santiago
October 16, 2018

USA crude added 45 cents to $71.42.

Crude prices jumped 1% on Friday, rebounding after two days of heavy declines with support from robust Chinese crude imports, but oil was still headed for its first weekly decline in five weeks.

Brent crude futures traded Friday afternoon at $80.67 per barrel, up from $57.17 per barrel on October 13, 2017.

Oil pared a weekly loss as investor focus shifted from broader market turmoil spurred by a plunge in US equities and returned to looming shortages from Iran's dwindling exports.

Oil stockpiles in the world's biggest economy are swelling amid International Energy Agency warnings about growing threats to global energy demand.

Atkinson also took a shot at the jittery trading community when asked about the discrepancy between the heights traders think crude will go and producers insisting there's not enough demand to warrant huge output increases: he said, "They live in a world of their own".

On Friday morning, the International Energy Agency shared that view, saying global oil demand will grow at a slower pace than initially expected this year and next amid economic risks stemming from trade tensions and higher oil prices.

The latest report showed that Saudi Arabia and other key nations in the Organization of Petroleum Exporting Countries are already delivering to make up for fellow members - notably Iran and Venezuela - who are suffering losses.

Global equities were set for their biggest daily gain in almost a month.

Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas U.S. August 22, 2018.

- U.S. commercial crude stocks increased 6 million barrels w-o-w amid a palpable decline in refinery throughputs, bringing total inventories to 410 million barrels.

Brent Crude was trading down on the day by 0.22 per cent at $80.08, down nearly $5 per barrel from this time last week.

Led by United States production, "global oil supply is growing at a relentless pace, even as Venezuelan production deteriorates and Iranian flows decline ahead of United States sanctions", the report said. “It has become clear that recent price gains are being driven by lower inventories heading into the peak demand winter season and not by the short-term storm shut-ins” in the Gulf of Mexico due to Hurricane Michael, said Colin Cieszynski, chief market strategist at SIA Wealth Management.

Michael made landfall in Florida on Wednesday as the third most powerful hurricane to strike the US mainland, though it has since weakened to a tropical storm.

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