Oil Prices Down: Fifth Weekly Loss Posted
For the fifth consecutive week, global oil prices were posted as a loss, this as concerns of high supplies continued to weigh on prices. For months, prices have declined while supply growth outpaced demand.
At this time, analysts are taking a “wait and see” position whether Saudi Arabia and other Organization of the Petroleum Exporting Countries will reduce production in an effort to increase prices.
As indicated by Ed Kevelson, head of US energy over-the-counter sales at brokerage Newedge USA, the Saudis are more tolerant of sustained lower prices. Clearly, the bigger issue is that people believe the Saudis will not be alone in making changes.
According to an industry official, less crude domestically and for export was sold by Saudi Arabia while production increased. The global benchmark, Brent, declined on Friday $0.70, or 0.8% to $86.13 per barrel on ICE Futures Europe. For the week, it dropped $0.03, down five weeks in a row.
In the United States, December delivery for sweet crude fell 1.3% or $1.08 on Friday, taking the price per barrel to $81.01 on the New York Mercantile Exchange. Several times within the past few weeks, prices dropped near the important $80 a barrel level but always bounced back higher. Also declining for the week was crude, which dropped 1.3%, posting a loss four consecutive weeks.
Energy Aspects estimated a drop in global demand to 92.8 million barrels a day in September, down from 93.3 million barrels per day from the prior month. At the same time, supplies increased by 92,000 barrels a day to 93.4 million barrels per day.
In a note from Energy Aspects, the reduction in prices has begun to support the demand for oil, at least to a certain extent, this as demand in Asia is now showing some signs of life. However, even seeing an improvement in demand, supplies will stay far out in front of demand growth.
The majority of future demand growth for oil will likely come from outside Europe and the United States, two countries that are typically large sources of demand.
Late Thursday, European Union leaders agreed that carbon emissions will be cut by a minimum of 40% by 2030, this compared to levels in 1990, a commitment that is legally binding on all of the member states.
Also in agreement was the share of renewables to include solar and wind, increasing to 27%, again compared to levels in 1990. Settled down $2.52 or 1.1% to $2.1817 per gallon was the November reformulated gasoline blendstock, with prices having slid this week 2.3%.
Diesel for November also dropped $1.71 or 0.7% to $2.4819 per gallon. With prices dropping 0.6% this week, loss was posted for the eighth week.
Get Analysts' Upgrades and Downgrades Daily - Enter your email address below to receive a concise daily summary of analysts' upgrades, downgrades and new coverage with MarketBeat.com's FREE daily email newsletter.