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Oil prices fall for second day on oversupply concerns
Oil prices fell for a second day on Tuesday as worries about possible disruptions to supply eased and as investors focused on potential damage to global growth from the festering Sino-U.S. trade spat.
Brent crude futures LCOc1 fell 32 cents, or 0.5 percent, to $71.52 a barrel by 0638 GMT to the lowest since April 17. They fell 4.6 percent on Monday.
U.S. West Texas Intermediate CLc1 futures were down 31 cents, or 0.5 percent, at $67.75 a barrel. They declined 4.2 percent on Monday.
“It is growth fears all around and more about concerns that … trade worries will come back and bite,” said Michael McCarthy, chief market strategist at CMC (NS:CMC) Markets in Sydney.
“(Oil trading) volumes are abysmal and there is very little commitment at current levels.”
China is still confident of hitting its economic growth target of around 6.5 percent this year despite views that it faces a bumpy second-half as a trade row with the United States intensifies, the state planning agency said on Tuesday. remarks came a day after China reported slightly slower growth for the second quarter and the weakest expansion in factory activity in June in two years, suggesting a further softening in business conditions in coming months as trade pressures build.
Goldman Sachs (NYSE:GS) on Monday said it expects price volatility in oil markets to remain elevated, keeping Brent crude in a $70 to $80 per barrel range in the short-term.
“Supply shifts, alongside the ongoing surge in Saudi production, create the risk that the oil market moves into surplus” in the third quarter, the report said.
Meanwhile, an oil worker strike in Norway intensified on Monday when hundreds more walked out in a dispute over pay and pensions after employers failed to respond to union demands for a new offer.
The strike, which began last Tuesday, has had a limited impact on Norway’s oil production so far, but some drillers warned of possible contract cancellations if the dispute goes on for a month or more. Libyan ports are reopening, output at the country’s Sharara oilfield was expected to fall by at least 160,000 barrels per day (bpd) after two workers were abducted by an unknown group, the National Oil Corporation said on Saturday.
U.S. oil output from seven major shale formations is expected to rise by 143,000 bpd to a record 7.47 million bpd in August, the U.S. Energy Information Administration said in a monthly report on Monday.
Production is expected to climb in all seven formations, with the largest gain of 73,000 bpd seen in the Permian Basin of Texas and New Mexico. All shale regions except for Appalachia are at a high, according to the data.