Oil Narrows Weekly Advance
(Bloomberg) -- Oil gave back much of the week’s gains ahead of a long weekend in the U.S., with investors eyeing simmering U.S.-China trade tensions.
Futures in New York fell below $55 a barrel Friday, extending the month’s drop to more than 6%. China is set to impose a 5% tariff on American crude from Sept. 1 that may slow the flow to a key market just as U.S. output hits fresh records. Also, Russia indicated that it reduced crude output in August less than promised in the agreement with OPEC and its allies.
“It’s simply positioning ahead of the long weekend,” said Bob Yawger, futures director at Mizuho Securities USA in New York. “It’s been the best week in the past seven. If you were long, would you want to go home this weekend still long, really no idea what kind of twitter feed the POTUS is going to unload while you hanging out at the beach bar?”
Oil remains under pressure as the outlook for the global economy continues to be weak and the U.S. pumps out crude at record-high levels. The Organization of Petroleum Exporting Countries and its allies said this week they expect to deplete the global oil surplus with their cuts, and falling inventories in America are indicating some level of success.
West Texas Intermediate for October delivery declined $1.70 to $55.01 a barrel on the New York Mercantile Exchange as of 11:56 a.m. local time.
Brent for October settlement, which expires Friday, lost 76 cents to $60.32 a barrel on the ICE Futures Europe Exchange. The more-active November contract sank $1.62 to $58.87.
Traders are also keeping an eye on Hurricane Dorian that’s now expected to become a Category 4 storm and make landfall on Florida’s east coast, the first major hurricane to hit the area in 15 years. If the storm only strikes Florida it will likely be bearish for crude prices as it will stymie fuel demand, according to UBS Group AG analyst Giovanni Staunovo. However, if it moves into the Gulf of Mexico, it could cut U.S. output and lift prices, he added.
--With assistance from James Thornhill.
To contact the reporters on this story:
Alex Longley in London at firstname.lastname@example.org;
Sheela Tobben in New York at email@example.com
To contact the editors responsible for this story:
David Marino at firstname.lastname@example.org
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.