Saudi Arabian Oil Drops; China Economic Worries Prevail
Saudi Arabian oil security fears and even a rallying Wall Street couldn’t help the oil in the end. Crude futures, which traded near flat earlier, settled deeper in the red as renewed worries over China took higher.
Reports of an outburst at Saudi Arabia’s Sasref refinery, oil prices decrease losses earlier in the day. The explosion, caused by a gas leak, restored worries over supply disruptions.
Concerns over fresh troubles in U.S.-China trade negotiations revived, as the market moved toward settlement. Also, weak economic data underlining worries about global growth weighed.
U.S. West Texas Intermediate crude is down at 78 cents, or 1.5%, at $52.81 per barrel.
Moreover, the U.K. Brent oil settled down at 61 cents at $68.74.
Chicago broker Price Futures Group’s market analyst said oil needs some Prozac. Also, mood shifts in the oil market are becoming a more destructive and lacking trend. He added that when you think the trend is down or up, investors need to get ready to be flipped around.
The analyst noted that WTI barbed to $63.89 in the aftermath of the Sept. 14 Saudi attack. Then, it broke down to $50.99 before recovering to one of the widest trading ranges in recent history.
Oil, pressured by a report overnight showing China’s factory gate prices declining at the quickest in more than three years in September. Besides, it came after customs data showed the Chinese imports contracted for a fifth-straight month.
Data showed that German investor sentiment worsened again in October. Also, Europe’s largest economy is heading for a recession.
The market barely reacted to Iranian President Hassan Rouhani’s response to an attack on Tehran’s oil tanker in the Red Sea. Besides, the evidence implied a government, and not a terrorist group was involved.
Saudi Arabian Oil Falls on Weaker Economic Growth
Saudi Arabian oil prices fell, as investors worried that the continuous U.S.-China trade war would keep gripping the global economy. Also, the swelling of U.S. crude inventories would further pressure prices. Losses were limited by optimism about a potential Brexit deal. Besides, signals from OPEC that further supply curbs are possible.
Global benchmark Brent LCOc1 futures lost 61 cents to settle at $58.74 a barrel. Also, U.S. WTI crude CLc1 fell 78 cents to settle at $52.81.
The U.S.-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis. The International Monetary Fund warned it, but it said output would revive if fighting tariffs were removed.
On Friday, Trump said China had agreed to buy $40 to $50 billion worth of American agricultural goods. This is in the first phase of an agreement to end the trade war.
Chinese companies have purchased 700,000 tonnes of pork and 700,000 tonnes of sorghum from the U.S. this year to meet market demand.
The oil market retraced early losses after reports Britain and the EU made headway to reach a Brexit deal.
Furthermore, analysts said any deal that avoids a “hard” or no-deal Brexit should improve economic growth.
Providing more support, OPEC said it will do whatever is in its power to sustain oil market stability beyond 2020.
OPEC, Russia and other producers have cut oil output by 1.2 mbp/d to support the market. Yet, an expected surge in U.S. crude inventories this week kept prices under pressure.
Also, U.S. crude stocks apparently grew for the fifth straight week.
