Published: Fri, June 14, 2019
Money | By Ethel Goodwin

Oil Prices Surge Over the Sentiments of Supply Cut

Oil Prices Surge Over the Sentiments of Supply Cut

Stock markets rose on Monday after a deal between the United States and Mexico to combat illegal migration from Central America late last week removed the threat of US tariffs on goods imported from Mexico.

The pact ends this month and the group meets in coming weeks to decide their next move, which sources said would most likely involve rolling over the existing cuts.

Brent crude futures, the worldwide benchmark for oil prices, were down 87 cents, or 1.4 percent, at $61.42 a barrel by 0231 GMT.

U.S. West Texas Intermediate (WTI) crude futures were at $53.85 per barrel, 59 cents, or 1.1%, above their last settlement.

"The revisions imply a 300,000 barrel per day reduction in our current global oil demand outlook of 1.3 million barrels per day year-on-year for this year", the British bank said.

"We have to analyse everything.in order to take a balanced decision in July" he said, referring to a key meeting of the so-called Opec+ alliance between Opec members and other oil producing countries including Russian Federation.

Oil prices fell more than 1 percent on Wednesday, weighed down by a weaker oil demand outlook and a rise in United States crude inventories despite growing expectations of ongoing OPEC-led supply cuts.

Never the less, despite Monday's (June 10th) rally traders still remained cautious over the health of a contracting global economy, which had pulled the plug off of a further bull-run of crude oil despite a considerable extent of production cut.

"With China slowing, the European Union sickly and the USA data starting to wobble, an economic downturn remains a clear and present danger", said Stephen Innes, managing partner at Vanguard Markets.

Concern about slowing demand and economic growth has had a large impact on sentiment amid a trade war between the USA and China.

The EIA lowered its 2019 world oil demand growth forecast by 160,000 barrels per day (bpd) to 1.22 million bpd and wound back its forecast for 2019 United States crude production to 12.32 million bpd, 140,000 bpd less than the May forecast.

Slowing demand has also contributed to a slump into negative territory in refining profits for Asian naphtha, an important feedstock for the petroleum industry, to levels not seen in over a decade.

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