Oil prices steady after five days of declines, sentiment bearish
SINGAPORE – Oil prices edged up on Friday, stabilising after five straight days of falls triggered by a surge in US crude inventories and doubts over the ability of producers to coordinate output cuts.
Brent crude futures LCOc1 were up 16 cents, or 0.35 percent, at $46.51 per barrel at 1220 GMT. US West Texas Intermediate (WTI) futures rose 17 cents, or 0.4 percent, to $44.83.
Despite the slight increases, traders said sentiment was bearish. Brent fell for the past five straight trading sessions and is down over 13 percent since its recent peak in mid-October.
“The persistent market dynamic of softer demand and stronger supply will become a more dominant driver of prices as the impact of OPEC’s verbal interventions begins to fade and expectations for coordinated cuts are readjusted,” BMI Research said in a note to clients.
“We see a trading range of $43-53 per barrel leading oil markets into the new year and we maintain our forecasts of an average 55 per barrel and $53.5 per barrel for Brent and WTI respectively for 2017,” it added.
Analysts said markets were also weighed down by traders pulling out money from futures ahead of the US presidential elections, which are seen as a risk to markets.
“I suspect the main drivers are that risk is being taken off the table ahead of next week’s election,” said Jeffrey Halley, senior market analyst at OANDA brokerage in Singapore.
Beyond concerns ahead of the elections, traders said oil fundamentals were also weak, with US crude stocks surging, demand growth low, and doubts that the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producer Russia can agree on a meaningful output cut this month.
US crude oil stockpiles soared more than 14 million barrels last week, the largest weekly build since the US Energy Department started keeping records in 1982, highlighting that a global fuel supply overhang is far from over.
While oil production remains near records and inventories are high, British bank Barclays said demand growth was timid.
“Q3 16 demand growth rate is less than one-third that of the same quarter last year,” Barclays bank said in a note to clients, estimating last quarter’s growth below 1 million barrels per day (bpd).
It said consumption increases for the last quarter of the year would not be much higher, before averaging 1.3 million bpd in 2017. -Reuters