Oil prices slide on US, China strains

16th October 2015, Comments 0 comments

World oil prices slid this week, dragged lower by a supply glut and weak crude demand against a backdrop of economic strains in key consumers China and the United States.

"Commodity prices have given back some of the previous week's gains, due in part to some mixed signals from the US and Chinese economies," said research group Capital Economics.

"Oil prices have fallen back... as supply remains abundant," they added in a note to clients.

By Friday, US benchmark West Texas Intermediate for delivery in November slid to $46.67 a barrel compared with $49.63 a barrel one week earlier.

Brent North Sea crude for December delivery stood at $49.93 a barrel compared with $52.65 a barrel for the expired November contract one week earlier.

After falling the first four days of the week, oil prices rebounded slightly Friday, helped by reports that Russia is considering production cuts, analysts said.

"Russia expressed a willingness to talk with OPEC countries about possible production cuts at a meeting next week," said Commerzbank analyst Carsten Fritsch.

Bloomberg News quoted Russian Energy Minister Alexander Novak as saying in Kazakhstan on Thursday that Russia was prepared to discuss price ranges and output cuts when it meets with the Organization of Petroleum Exporting Countries in Vienna on Wednesday.

"We believe the chances of this yielding any concrete results are very slight," noted Fritsch.

Russia is among the world's top oil producers alongside OPEC kingpin Saudi Arabia and the United States.

Oil prices fell Thursday as the United States reported an increase in already high crude stockpiles, adding to concerns about the global supply glut.

The US Department of Energy surprised the market in a report showing that the country's commercial crude inventories jumped by 7.6 million barrels last week, nearly three times as much as experts had predicted.

"News that Russia is not ruling out possible production cuts offset the increase in US stockpiles," said Bernard Aw, market strategist at IG Markets in Singapore.

"Broadly speaking, oil prices are largely supported due to expectation that non-OPEC production will begin to decline, while global demand is likely to pick up next year, according to OPEC forecast," he told AFP.

OPEC has said that its output rose by 110,000 barrels per day to 31.5 million in September as the group continued to pump above its target.

"Oil prices tumbled... this week as investors reacted to the OPEC monthly report and China economic data," said Sanjeev Gupta, head of the Asia Pacific oil and gas practice at professional services firm EY.

Prices had fallen Wednesday, as weak Chinese trade data and poor consumer spending numbers in the US added to a picture of a slowing global economy.

Underpinning the bearish sentiment has been a forecast this week from the International Energy Agency that pointed to much slower oil demand growth next year.

But the OPEC oil producers cartel seems intent on pumping out crude in a bid to maintain market share with the United States.

A key reason for the 50-percent slump in oil prices between June last year and the start of 2015 was owing to the sizeable extraction of crude oil from North American shale rock.


© 2015 AFP

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