SINGAPORE: Oil prices dipped on Monday amid concerns that an economic downturn may dent fuel consumption, but crude markets remain broadly supported by supply cuts led by producer group OPEC and US sanctions against Iran and Venezuela.
Brent crude oil futures were at $67.03 per barrel at 0231 GMT, down 13 cents, or 0.2 percent, from their last close, but not far off the $68.14 per barrel 2019-high reached last week.
US West Texas Intermediate (WTI) futures were at $58.32 per barrel, down 20 cents, or 0.3 percent, from their last settlement, and also not far off their 2019-high of $58.95 from the previous week.
“The greatest downside risk to our oil price view is demand weakness on slower economic growth. Our base case is that global oil demand will increase by 1.3 million barrels per day (bpd) in 2019 ... A synchronized global slowdown in growth could push global demand growth to below 1 million bpd,” Bernstein Energy said on Monday.
US manufacturing output fell for a second straight month in February, in a sign that the world’s biggest economy has been slowing down in the first quarter.
In Asia, Japan’s exports fell for a third straight month in February in a sign of growing strain from slowing global demand.
Despite this, oil prices have gained around a quarter since the start of the year amid US sanctions against Iran and Venezuela, and as the Organization of the Petroleum Exporting Countries (OPEC) and non-affiliated allies like Russia — known as OPEC+ — have pledged to withhold 1.2 million bpd in supply to prop up prices.
Saudi Arabia said on Sunday that balancing oil markets was far from done as inventories were still high.
Russia also said production cuts would stay in place at least until June.
As a result, Bernstein forecast an inventory draw of 37 million barrels in the first quarter for the 36 member countries of the Organization for Economic Co-operation and Development, which comprises most industrialized nations.
The International Energy Agency said on Friday it expected oil markets to be in a modest deficit from the second quarter of 2019.
Key for the supply and demand balance will be the US, where crude production has soared by around 2 million bpd over the past year, thanks largely to an onshore boom in shale formation drilling.
The number of rigs drilling for new oil production in the United States has been falling in 2019, and hit its lowest level since April 2018 last week, at 833 operating rigs.
However, US crude oil production still increased at the start of 2019, hitting a record 12.1 million barrels per day (bpd) in February, data from the Energy Information Administration (EIA) showed.
Output has since dipped back to 12 million bpd, but that still makes America the world’s biggest crude oil producer.
Oil slips on economic slowdown, but OPEC-led cuts still support
Oil slips on economic slowdown, but OPEC-led cuts still support
- US manufacturing output fell for a second straight month in February
- It was a sign that the world’s biggest economy has been slowing down in the first quarter
Closing Bell: Saudi main index closes in red at 10,847
RIYADH: Saudi Arabia’s Tadawul All Share Index dipped on Wednesday, losing 58.51 points, or 0.54 percent, to close at 10,847.93.
The total trading turnover of the benchmark index was SR3.78 billion ($1 billion), as 73 of the listed stocks advanced, while 187 retreated.
The MSCI Tadawul Index decreased, down 7.09 points or 0.48 percent, to close at 1,472.98.
The Kingdom’s parallel market Nomu lost 178.75 points, or 0.77 percent, to close at 22,916.83. This comes as 30 of the listed stocks advanced, while 37 retreated.
The best-performing stock was the Power and Water Utility Co. for Jubail and Yanbu, with its share price surging by 8.47 percent to SR31.24.
Other top performers included Saudi Paper Manufacturing Co., which saw its share price rise by 6.13 percent to SR53.70, and Jamjoom Pharmaceuticals Factory Co., which saw a 4.58 percent increase to SR137.
On the downside, the worst performer of the day was CHUBB Arabia Cooperative Insurance Co., whose share price fell by 5.14 percent to SR17.53.
Saudi Kayan Petrochemical Co. and Arabian Internet and Communications Services Co. also saw declines, with their shares dropping by 4.87 percent and 4.43 percent to SR4.88 and SR181.40, respectively.
On the announcement front, Saudi Kayan Petrochemical Co. announced its annual financial results for 2025, with sales dropping 3.06 percent year-on-year to SR8.45 billion. The company also recorded a net loss of SR893.86 million.
In a Tadawul statement, the company said the net loss and decline in annual sales were driven by a drop in average selling prices, despite higher sales volumes.
