Oil pump jacks are seen at the Vaca Muerta shale oil and gas deposit in the Patagonian province of Neuquen, Argentina, January 21, 2019. REUTERS/Agustin Marcarian/File Photo acquire license rights
- Dollar companies on solid US data
- Mixed Chinese data and possibly weaker winter demand weigh
- Rising oil production from Iran and Venezuela is also limiting prices
- US crude oil inventories fall for fourth week in a row – ERP
HOUSTON, Sept 7 (Reuters) – Global benchmark Brent crude fell below $90 a barrel in volatile trading on Thursday, halting a nearly two-week rally as multiple signals warned of weaker demand in coming months.
Brent crude futures settled 68 cents, or 0.8%, lower at $89.92 a barrel, after trading between $89.46 and $90.89.
U.S. West Texas Intermediate (WTI) crude futures closed down 67 cents, or 0.8%, at $86.67 a barrel, after trading between $86.39 and $87.74.
Thursday’s decline came after nine straight gains in WTI and seven straight gains in Brent.
Prices also jumped earlier in the week after Saudi Arabia and Russia, the world’s two biggest oil exporters, extended their voluntary supply cuts through the end of the year. These were in addition to the cuts agreed by several OPEC+ producers in April until the end of 2024.
“Crude oil futures are feeling some corrective pressure from a new high in the U.S. dollar index as well as weaker economic data from the euro zone, where economic activity grew 0.1% versus 0.3% expected,” said Dennis Kissler, senior vice President of Trading at BOK Financial.
The dollar strengthened, pushing the yen to a 10-month low and sending the euro and sterling to their weakest levels in three months, as investors bet on a still-robust U.S. economy. A stronger dollar raises the cost of greenback-denominated oil purchases for holders of other currencies.
“As I start to look at the street a little bit, there are signals that say hold,” said John Kilduff, partner at Again Capital.
Market participants also digested mixed data from China. Total exports fell 8.8% year-on-year in August, while imports fell 7.3%. But crude oil imports rose 30.9%.
“The wind was taken out of the bulls’ sails overnight by rising Chinese product exports last month, even as crude oil imports rose,” said PVM Oil analyst Tamas Varga.
Concerns about rising oil production from Iran and Venezuela, which could offset some of cuts from Saudi Arabia and Russia, also kept the market under control.
However, U.S. demand remained strong as crude oil inventories fell by 6.3 million barrels last week, falling for the fourth straight week and falling over 6% last month, government data showed.
“At this point, it is really difficult for us to see any negative factors due to supply shortages,” said Leon Li, an analyst at CMC Markets in Shanghai.
“However, we need to consider possible demand risks, for example the market could slow in the fourth quarter and enter an off-season for oil consumption after the end of summer demand.”
Reporting by Erwin Seba in Houston; Additional reporting by Arathy Somasekhar in Houston; Ahmad Ghaddar in London; Trixie Yap in Singapore Edited by Marguerita Choy, Frances Kerry, Nick Macfie
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