Commodities Weekly: Just too many slippery spots for oil last week

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Commodities Weekly: Just too many slippery spots for oil last week
SLEEP, BUT DON'T SLIDE: Sea lions resting at an abandoned oil platform at Organos beach in Piura, Peru. West Texas Intermediate sank to its lowest level since May 10, while Brent slid to its worst in 2-1/2 months last week.

London - Poor global growth outlook, supply glut pulls weigh on crude

By AFP

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Published: Sat 23 Jul 2016, 2:49 PM

Last updated: Sat 23 Jul 2016, 10:08 PM

World oil prices hit the lowest levels for almost 2-1/2 months last week as a poor global growth outlook added to concerns over a long-running supply glut.
US benchmark West Texas Intermediate struck $43.69 a barrel on Wednesday - the lowest level since May 10.
On Friday, Brent North Sea crude slid to a near 2-1/2-month low point at $45.26 a barrel.
A rally seen in early July "is tapering off and the markets are starting to feel the effects of a supply glut again", said Alex Wijaya, a trader at CMC Markets.
Crude had risen from near 13-year lows below $30 in February to above $50 in June owing to fires in Canada's key oilfields, unrest in key producer Nigeria and the start of the US driving season.
However, with those issues now fading and dealers fretting over Brexit, prices have softened again.
The US Department of Energy on Wednesday reported that the country's commercial crude stockpiles fell by 2.3 million barrels last week, offsetting a surprise rise in gasoline inventories during the peak demand season for American motor fuel. "We've seen a little bit of a surprise in how much decline in oil there was," said Bert Melek at TD Securities.
Before the US inventory report, prices had already fallen on renewed strength for the dollar - making the commodity more expensive for buyers holding weaker currencies. And prices were weighed down by a downbeat forecast from the International Monetary Fund, which lowered its global growth forecasts, citing the impact of Britain's vote to exit the European Union.
The IMF said it expects the world economy to expand 3.1 per cent this year, lower than it forecast in April. Slower overall growth would likely dampen the expansion of crude oil demand.
In China, which is the world's biggest energy consumer, its premier on Friday said the world could not depend on the country to save it from a Brexit-induced downturn.
"It is impossible to carry all of the burden of the whole world on our shoulders," said Premier Li Keqiang, as he prepared to host a meeting of G20 finance ministers.
China's economic boom of recent decades has seen it become the world's second-largest economy and a key driver of global growth, with a massive stimulus package Beijing launched in 2008 credited with helping ease the pain of the global financial crisis.
But investors worldwide have worried over its slowing expansion, while Britain's referendum last month has heightened risks and instability.
Since Britain voted in favour of exiting the European Union, its economy has faced a "dramatic deterioration" in activity as orders dried up and business investments were canned, key data showed on Friday.
Private sector business activity, as measured by research group Markit's Purchasing Managers Index, sank in July to 47.7 points. It was the lowest level since April 2009 following the global financial crisis, and sparked predictions from some quarters of a painful recession. The preliminary reading compared with 52.4 in June and crucially took the PMI below the boom-or-bust 50 points barrier that signals contraction, Markit said.
And owing to the uncertainty caused by Brexit, the head of Hong Kong's stock exchange this week put on hold a planned link between commodities markets in London and Hong Kong.
In oil trading Friday at around 1615GMT, WTI for delivery in September was down 84¢ at $43.91 a barrel compared with the close on Thursday.
Brent for September shed 86¢ to $45.34 a barrel.


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