Oil rebound to $50 unlikely without deeper output cuts

Oil prices slide over 3% clock weekly decline on demand concerns

West Texas Intermediate US crude skidded 59 cents, or 1.5 per cent, to $39.18 per barrel after hitting $38.55, its lowest since July 10.

Saudi Arabia also reduced prices in March, after which there was a record fall in crude.

Howie Lee, economist at OCBC Bank in Singapore, said, "The sentiment has become bitter and there may be some sales pressure going forward".

Starting with the USA, worries about the health of road fuel demand intensified this morning, with Labor Day holiday marking the end of the summer driving season.

John Kemp, commodities analyst for Reuters, noted that hedge funds and other money managers sold the equivalent of nearly 40 million barrels in the six most important petroleum futures and options contracts at the end of August: "The rate of selling equalled the week to July 28 as the fastest since mid-March, when the [pandemic] was raging unchecked and major oil exporters were engaged in unrestricted volume warfare".

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Keisuke Sadamori, Director of Energy Markets and Security at the International Energy Agency, told Reuters: "There is a lot of uncertainty about the Chinese economy and its relations with major developed countries, the United States and nowadays Europe".

"It's not such an optimistic situation. that casts some shadow over the growth outlook".

Following a week of losses, today oil prices continue the decline, mainly because of developments in the Middle East and Asia, and also on concerns that road fuel demand might dip in the US.

Oil prices posted the sharpest drop since July 30 after Saudi Arabia's state producer, Saudi Aramco, announced it would trim October prices for its sales to the USA and Saudi's main market Asia, a move that is fueling demand concerns amid increasing coronavirus cases worldwide. The decrease was interpreted by the markets as a sign that the demand recovery in the region home to the second and third largest oil consumers is running out of steam.

US energy firms last week added oil and natural gas rigs for the second time in the past three weeks, according to a weekly report by Baker Hughes Co on Friday. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore, Fusion Media is not responsible for any loss of transactions that may arise from the use of this data. Please be fully aware of the risks and costs associated with trading financial markets.

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