Oil falls 1% on weaker oil demand growth, surprise gain in US crude stocks

The US Energy Information Administration lowered its 2019 world oil demand growth forecast by 160,000 barrels per day (bpd) to 1.22 million bpd. (Reuters)
Updated 12 June 2019

Oil falls 1% on weaker oil demand growth, surprise gain in US crude stocks

  • The US Energy Information Administration lowered its 2019 world oil demand growth forecast by 160,000 barrels per day (bpd) to 1.22 million bpd

SEOUL: Oil prices fell more than 1 percent on Wednesday, weighed down by a weaker oil demand outlook and a rise in US crude inventories despite growing expectations of ongoing OPEC-led supply cuts.
Brent crude futures, the international benchmark for oil prices, were down 87 cents, or 1.4 percent, at $61.42 a barrel by 0231 GMT.
US West Texas Intermediate (WTI) crude futures were down 85 cents, or 1.6 percent, at $52.41 per barrel.
The US Energy Information Administration (EIA) cut its forecasts for 2019 world oil demand growth and US crude oil production in a monthly report released on Tuesday.
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 US crude production to 12.32 million bpd, 140,000 bpd less than the May forecast.
A surprise increase in US crude stockpiles also kept oil prices under pressure.
“Investors have been concerned about the recent rise in stockpiles in the US,” ANZ bank said in a note.
US crude inventories rose by 4.9 million barrels in the week ended June 7 to 482.8 million barrels, according to data from the American Petroleum Institute (API) on Tuesday. That compared with analysts’ expectations for a decrease of 481,000 barrels.
Official data from the Energy Information Administration is due at 10:30 A.M. EDT (1430 GMT) on Wednesday.
Alongside concerns about rising supply, ongoing trade tensions between the United States and China, the world’s two biggest oil consumers, weighed on prices. US President Donald Trump said on Tuesday he was holding up a trade deal with China.
“Oil prices have struggled to retain bullish gains as traders stay cautious over heightened geopolitical risks and persistent weakness in the global economic backdrop,” said Benjamin Lu, commodities analyst at Phillips Future in Singapore.
With the next meeting of the Organization of the Petroleum Exporting Countries (OPEC) set for the end of June, the market is eyeing whether the world’s major oil producers would prolong their supply cuts.
OPEC, along with non-members including Russia in a group called OPEC+, have limited their oil output by 1.2 million bpd since the start of the year to prop up prices.
The Energy Minister for the United Arab Emirates Suhail Al-Mazroui said on Tuesday that OPEC members were close to reaching an agreement on continuing production cuts.
OPEC is set to meet on June 25, followed by talks with its allies led by Russia on June 26. But Russia suggested a date change to July 3 to 4, sources within the group previously told Reuters.


Turkey says may begin oil exploration under Libya deal in 3-4 months

Updated 29 May 2020

Turkey says may begin oil exploration under Libya deal in 3-4 months

  • Donmez said Turkish Petroleum (TPAO) would begin operations in areas under its license after the process was completed
  • Turkey could face possible EU sanctions over its operations

ANKARA: Turkey may begin oil exploration in the eastern Mediterranean within three or four months under a deal it signed with Libya that was condemned by others in the region including Greece, Energy Minister Fatih Donmez said on Friday.
Libya’s internationally-recognized Government of National Accord (GNA) signed the maritime delimitation deal last year. Turkey says it creates an exclusive economic zone from its southern coast to Libya’s northeast coast, and protects rights to resources.
Greece, Cyprus and others oppose the accord and call it illegal, an accusation Ankara has rejected. The European Union also opposes the maritime deal that was signed alongside an agreement for Turkey to provide military support to the GNA, which has battled forces based in eastern Libya for more than a year.
Speaking at a ceremony to mark the launch of Turkey’s Fatih oil-and-gas drilling ship to the Black Sea, Donmez said Turkish Petroleum (TPAO), which had applied for an exploration permit in the eastern Mediterranean, would begin operations in areas under its license after the process was completed.
“Within the framework of the agreement we reached with Libya we will be able to start our oil exploration operations there within three to four months,” Donmez said. Turkey’s new Kanuni drill ship would also go to the Mediterranean later this year, he added.
The move could further stoke tensions in the region, where Turkey has been at loggerheads for years with Greece, Cyprus, Egypt and Israel over ownership of natural resources. Turkey could also face possible EU sanctions over its operations.
Separately, Donmez said the Fatih drill ship would hold its first operation in the Black Sea on July 15, the anniversary of a 2016 failed coup attempt. Friday also marked the anniversary of Istanbul’s conquest by the Ottoman Empire in 1453.