Oil Prices Pause to Start the Week
February 11 2019 - 6:34AM
Dow Jones News
By Christopher Alessi
-- Oil prices were mixed Monday morning, as investors weighed
signs of tightening global supply against broader macroeconomic
concerns that could weigh on the world's appetite for crude.
-- Brent crude, the global oil benchmark, was trading up 0.06%
at $62.14 a barrel on London's Intercontinental Exchange.
-- West Texas Intermediate futures, the U.S. oil standard, were
down 0.47% at $52.47 a barrel on the New York Mercantile
Exchange.
HIGHLIGHTS
Mixed Messages: Oil prices are "still trying to figure out what
lead to follow. On the one hand, there is the OPEC+ cut story, now
coupled with increasing issues around Venezuelan supply, and a
global equity market that is still pretty close to the rebound
highs set over the last two weeks," analysts at consulting firm JBC
Energy wrote in a note Monday. "At the same time," they added, "it
has to be argued that a lot of the economic data that has been
released over the last few days has really not been too
encouraging, and U.S.-Chinese trade talks are also seemingly not
progressing very fast."
Oil prices have been bolstered since the start of the year by
the implementation of fresh production cuts from the Organization
of the Petroleum Exporting Countries and its allies outside the
cartel, led by Russia. More recently, prices have been supported by
signs that further supply from OPEC member Venezuela could be at
risk following U.S. sanctions imposed on the South American
country's oil industry late last month. However, increasing signs
that the global economy is sputtering have helped to keep a ceiling
on prices.
Demand Doubts: Oil investors have been concerned that softer
global economic growth could weigh on world oil demand this year.
"Global growth concerns struck with a vengeance amid a deluge of
disappointing economic data. No region was spared with China, the
eurozone and the U.S. all displaying pockets of economic malaise,"
said Stephen Brennock, an analyst at brokerage PVM Oil Associates
Ltd. "As a result, economic pessimism is increasingly pervasive
with global fundamentals seemingly deteriorating by the day.
Needless to say, stalling global economic growth has stoked fears
of slowing oil demand," he added.
On the global economic front, investors were looking ahead to
the latest round of trade talks between the U.S. and China on
Monday. "Things haven't progressed that far forward," said David
Madden, market analyst at brokerage CMC Markets. "No one wants to
be overly long oil, as the trade situation is looking slightly
worse," he added.
INSIGHT
OPEC: The oil cartel's latest plan to curb output should help to
rebalance the market within the first quarter of this year, United
Arab Emirates oil minister Suhail al-Mazrouei reportedly told
al-Arabiya television Monday. OPEC and 10 producers outside the
cartel, including Russia, agreed late last year to collectively
hold back crude output by 1.2 million barrels a day for the first
half of this year, part of an effort to rein in a burgeoning supply
glut and boost prices. As a result, OPEC has "reduced exports in
January sharply, tightening the physical market," according to
Martijn Rats, oil analyst at Morgan Stanley.
Still, "there are doubts about whether Russia will remain part
of the production cut agreement beyond midyear if it is extended,"
analysts at Commerzbank argued in a note Monday.
AHEAD
-- The U.S. Energy Information Administration releases a monthly
report on oil production on Tuesday.
-- OPEC releases its monthly oil market report on Tuesday,
followed by that of the International Energy Agency on
Wednesday.
Write to Christopher Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
February 11, 2019 06:19 ET (11:19 GMT)
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