Third Weekly Loss for Crude Despite OPEC Nearing Agreement to Extend Cuts

Third Weekly Loss for Crude Despite OPEC Nearing Agreement to Extend Cuts

Third Weekly Loss for Crude Despite OPEC Nearing Agreement to Extend Cuts

FILE PHOTO: A pumpjack is seen at the Sinopec-operated Shengli oil field in Dongying, Shandong province, China January 12, 2017.

Still, the price of Brent is down nearly 20% from its 2019 peak above $75 a barrel in April, pressured by an economic downturn that has started to impact oil demand.

Benchmark Brent crude for August delivery rose 0.3 percent to $62.47 per barrel while U.S. West Texas Intermediate (WTI) crude futures were up 0.9 percent at $53.73 per barrel.

But analysts warn that as far as they're concerned, one thing is certain: the lack of a trade deal with China, combined with the animosity against Mexico, will likely plunge the global economy into a recession - and Stephen Schork, president of the Schork Group, told Bloomberg radio on Friday that this in turn could cause oil to go "well below $40" per barrel.

The U.S. Energy Information Administration cut its 2019 world oil demand growth forecast by 160,000 barrels per day, to 1.22 million Bpd (Mmbpd).

Alongside concerns about rising supply, ongoing trade tensions between the United States and China, the world's two biggest oil consumers, weighed on prices.

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

Hedge fund managers are liquidating bullish oil positions at the fastest rate since the fourth quarter of 2018.

The Organisation of the Petroleum Exporting Countries (OPEC) and some non-affiliated producers including Russian Federation, known collectively as OPEC+, have withheld supplies since the start of the year to prop up prices.

Saudi Arabia and Russian Federation work on a bilateral basis as well as with other producing countries to prevent oil prices from plunging, visiting Saudi Arabian Minister of Energy, Industry and Mineral Resources Khalid Al-Falih said here Monday. The cuts have helped winnow global stockpiles and pushed prices higher, along with the removal of supplies from Iran and Venezuela.

OPEC is close to reaching an agreement to extend the production cut deal beyond its current expiry date at the end of June, said Khalid al-Falih, the energy minister of OPEC's largest producer and de facto leader, Saudi Arabia.

OPEC+ is due to meet in late June or early July to decide whether to extend the pact.

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