Oil Heads for Worst Week Since May on Oversupply Fears
July 19 2019 - 10:39AM
Dow Jones News
By David Hodari and Amrith Ramkumar
Oil prices edged higher Friday but remained on track for their
worst week since May, the latest turn lower for crude in 2019 as
fears of excess supply buffet prices.
West Texas Intermediate futures, the U.S. crude benchmark,
inched up 0.5% to $55.59 a barrel on the New York Mercantile
Exchange and was on track to snap a four-session losing streak.
Prices are down about 7.5% for the week.
Brent crude, the global price gauge, added 0.8% to $62.43 a
barrel on London's Intercontinental Exchange, trimming its weekly
slide to roughly 6%.
Friday's modest rebound came with the U.S. and Iran tussling
over the fate of a drone, as many analysts remain wary that
tensions between the two countries could further disrupt the flow
of oil around the globe.
Iran denied that the U.S. Navy had downed one of its drones,
hours after President Trump said an assault ship named the USS
Boxer had taken defensive action because the drone was flying too
close. That followed several close encounters between American
warships and the Iranian military. Earlier, Iranian forces said
they had seized a foreign tanker.
Still, elevated stockpiles around the world continue to signal
to investors that there is plenty of oil available, curbing price
gains. U.S. crude remains about 16% below its April peaks with the
U.S. still churning out record amounts of crude and analysts wary
that crumbling demand will lead to a production glut.
Analysts also said Tropical Storm Barry was less disruptive than
anticipated to production and refining activity near the Gulf of
Mexico recently, keeping some cautious that prices can sustain
their Friday rally.
"Call it a bounce or a dead-cat bounce, after such a sharp drop,
this upside is not very surprising and in the end it's still a
muted upward gain," said Commerzbank analyst Carsten Fritsch.
In the latest sign of softening projections for fuel
consumption, International Energy Agency Director Fatih Birol on
Thursday told Reuters that the agency was cutting its 2019
oil-demand growth forecast by 100,000 barrels.
Additionally, the recent news that Russia's Druzhba pipeline --
which was contaminated by organic chloride in April -- has returned
to full capacity removes another threat to global supply, said
Geordie Wilkes, head of research at Sucden Financial Research.
Despite production cuts by the Organization of the Petroleum
Exporting Countries and allies including Russia, some analysts
expect crude prices to remain in their current trading range moving
forward.
Elsewhere in commodities Friday, most-active Comex copper
futures advanced 3% to $2.7910 a pound, paring some of their recent
declines and hitting a roughly two-month high as analysts expect
Chinese stimulus efforts to boost demand moving forward.
Gold added 0.6% to $1,436.60 a troy ounce, extending a recent
rally to a six-year high as analysts continue to wager that lower
bond yields will support bullion, which becomes more attractive to
yield-seeking investors when interest rates fall.
Write to David Hodari at David.Hodari@dowjones.com and Amrith
Ramkumar at amrith.ramkumar@wsj.com
(END) Dow Jones Newswires
July 19, 2019 10:24 ET (14:24 GMT)
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