Oil falls after Trump calls on OPEC to lift output; global growth concerns persist

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Oil futures fell on Thursday as U.S. President Donald Trump called on OPEC to lift output, recent domestic supply data surprised with a gain, and global growth concerns fed uncertainty over energy demand.

In a tweet Thursday morning, Trump again called for more supply on global markets and said the price of oil was “getting too high.” Prices have rallied by some 25% year to date as the Organization of the Petroleum Exporting Countries and its allies have said they remain committed to their pledge to curb production.

In Thursday dealings, West Texas Intermediate crude for May delivery












CLK9, -0.77%










 on the New York Mercantile Exchange fell 47 cents, or 0.8%, to $58.94 a barrel. International benchmark May Brent crude












LCOK9, -0.87%










which expires at Friday’s settlement, lost 57 cents, or 0.8%, to $67.26 a barrel on ICE Futures Europe.

Prices for both benchmarks momentarily suffered a steep, sudden, decline early Thursday, just as Trump’s tweet came out, and as data showing the U.S. economy grew a slower 2.2% in the fourth quarter were released, feeding concerns over a slowdown in energy demand. A recent slump in Treasury yields — and an inversion of the yield curve — has underlined those economic worries.

Oil had finished lower on Wednesday after the U.S. Energy Information Administration revealed that U.S. crude supplies unexpectedly rose by 2.8 million barrels for the week ended March 22. That was contrary to expectations for a decline of 2.2 million barrels, based on a survey of analysts polled by S&P Global Platts.

“While the build is significant shift in the immediate term, some near-term supply volatility is to be expected following recent fires at outages that have impacted refiners in the Houston area,” said Robbie Fraser, global commodity analyst at Schneider Electric. “The broader trend continues to see total stocks erasing their surplus to the five-year average, particularly as the market starts to shift into the summer demand season.”

Futures prices, however, remain solidly higher year to date on signs of reduced global supplies on the back of efforts by major oil producers to curb production. Members of OPEC and other major oil producers, including Russia, have pledged to curb crude production by around 1.2 million barrels a day from October levels for the first half of this year to prop up markets.

“Oil remains well supported at these levels by continued OPEC output cuts and [U.S.] sanctions on Iran and Venezuela,” said Jasper Lawler, head of research with London Capital Group.

Worries surrounding another power outage in Venezuela should start to raise concerns about a shutdown of Venezuelan oil output, analysts have stressed.

Russia has trailed in implementing production cuts agreed to with OPEC members in December, but Citi, in a report, said there is growing confidence Russia will have stepped up its response by the next meeting in June. Citi analysts estimate Russia’s daily production this month will average 11.3 million barrels, 120,000 above agreed-to targets.

Meanwhile, Citi lifted its 2019 average price forecast on Brent by 9.4% to $70 a barrel, citing tighter supplies.

Among the products traded on Nymex, April gasoline












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 was at $1.872 a gallon, down 1.3%, while April heating oil












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 shed 0.7% to $1.966 a gallon. The April contracts expire Friday.

May natural gas












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tacked on 0.4% to $2.73 per million British thermal units on its first full session as a front-month contract.

The EIA reported Thursday that domestic supplies of natural gas fell by 36 billion cubic feet for the week ended March 22. Analysts polled by S&P Global Platts had expected a decline of 33 billion cubic feet.

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Source : MTV