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Oil Up, Finishes August Strong Despite Oversupply Fears

CommoditiesAug 31, 2020 12:21AM ET
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© Reuters.

By Gina Lee

Investing.com – Oil was up on Monday morning in Asia, with global stimulus measures continuing to support prices but with gains capped over creeping fears of an oversupply.

Brent oil futures rose 0.61% to $46.09 by 12:17 AM ET (5:17 AM GMT) and WTI futures were up 0.40% to $43.14.

Hurricane Laura, which struck the Gulf of Mexico region during the previous week, had a weaker impact on oil markets than feared, with the region’s offshore platforms and refineries that were shut down during the storm continuing to restore operations.

A weak dollar was also supporting oil, but sluggish fuel demand recovery as the number of COVID-19 cases continues to rise and fears of an oversupply dampened investor sentiment.

Some investors warned of hurdles ahead for the black liquid.

“We believe that the impact of a cheaper dollar from current levels will see a minimal impact on crude purchases, irrespective of slightly more favorable crude pricing... the relationship between demand and price elasticity is blunted in the current environment, because oil is already cheap and readily available and there currently exist a dearth of buyers,” RBC Capital’s Mike Tran said in a note.

Tran's warning was supported by data from Refinitiv and Vortexa forecasting that Chinese crude oil imports in September will fall for the first time in five months.

Meanwhile, Saudi Arabia’s energy minister Prince Abdulaziz bin Salman Al-Saud reportedly said on Sunday that Saudi Aramco (SE:2222) discovered two new oil and gas fields, Abraq al-Toloul oil field and Hadabat al Hajara gas field, in the country’s northern regions.

Oil Up, Finishes August Strong Despite Oversupply Fears
 

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David Bennett
David Bennett Aug 31, 2020 3:29PM ET
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supply will continue to be a problem in the US until portions of fields hit the decline curve, but we are headinf that way. Coast any new completions til the end of the year amd 2021 should be a decent, not great, recovery.
 
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