By Christian Berthelsen And Georgi Kantchev
Oil prices wavered between gains and losses Friday as
fourth-quarter U.S. economic growth came in weaker than
expected.
The domestic and international leading oil contracts had been in
positive territory, but drifted lower after the Commerce Department
reported that U.S. fourth-quarter gross domestic product grew 2.6%.
The average estimate of economists surveyed by The Wall Street
Journal was 3.2% growth.
The global Brent contract slipped 11 cents, or 0.2%, at $49.02 a
barrel on the ICE Futures Europe exchange.
Light, sweet crude for March delivery gained 15 cents, or 0.4%,
at $44.68 a barrel on the New York Mercantile Exchange.
Analysts said the small gains early in the session were likely
the result of traders taking profits from bearish bets against the
market given the end of the trading week and month. Traders buy
contracts to close out bearish bets.
But with the global oil supply-demand picture unrelentingly weak
and market sentiment bearish, the addition of a lower-than-expected
GDP reading for the world's largest economy took away any buying
motivation in the market.
"The market's really fighting a losing battle here," said Andy
Lebow, a broker at investment bank Jefferies. "It's hard to trace a
meaningful recovery in the next few months."
Oil futures have lost nearly 60% of their value since last June,
as surging production from the U.S., Iraq and Libya have flooded
the market at a time of weak demand growth as the global economy
slows. The losses have stabilized somewhat in the last two weeks,
but fundamental factors are expected to continue to deteriorate in
coming months.
Indeed, market participants have been stunned by a pair of
back-to-back U.S. inventory surges in domestic oil stockpiles in
the last two weeks, with production reaching a new 31-year
high.
"Crude oil is once again dead-cat bouncing," analyst Matt Smith
of research consultancy Schneider Electric said in a note.
"Meow."
Major oil companies have announced spending cuts in recent weeks
to cope with the price rout. Chevron Corp. said Friday that asset
sales and strength in its refining segment helped offset tumbling
crude oil prices, resulting in better-than-expected results in its
December quarter. Still, Chevron said it plans to pare its capital
spending by 13% this year to $35 billion.
Royal Dutch Shell said Thursday it would curb its planned
spending over the next three years by some $15 billion and scale
back investments in shale. ConocoPhillips also said it would slash
its capital budget as the company reported losses in the fourth
quarter of last year.
Meanwhile, Saudi Arabian King Salman bin Abdulaziz has ordered
major changes to his government, including a cabinet shuffle, but
decided to keep veteran oil minister Ali al-Naimi in place.
Mr. Naimi, one of the most influential oil-price brokers in the
global market, was the main strategist behind the November decision
by the Organization of the Petroleum Exporting Countries to keep
its oil output steady in a bid to protect the cartel's market share
against booming U.S. shale production.
The price slump, however, is good news for the global economy,
reducing gasoline prices at the pump and providing a boost to
economic growth for net importers of oil. Barclays estimates that
the halving in crude prices in the past six months, if sustained
for the whole of 2015, would mean a transfer of $1.6 trillion from
oil-producing to oil-consuming countries.
In refined products, February gasoline fell 1.22 cents, or 0.9%,
to $1.3415 a gallon on the Nymex. February diesel fell 1.34 cents,
or 0.8%, to $1.6050 a gallon.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
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