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Oil slips on economic worries, but still set for strong weekly gain

CommoditiesJan 10, 2019 10:42PM ET
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© Reuters. Pump jacks operate at sunset in an oil field in Midland

By Henning Gloystein

SINGAPORE (Reuters) - Oil slipped on Friday amid concerns over the outlook for the global economy, but output cuts agreed by major exporters underpinned crude prices and kept markets on track for a strong weekly climb.

International Brent crude futures (LCOc1) were at $61.55 per barrel at 0333 GMT, down 13 cents, or 0.2 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures (CLc1) dropped 7 cents, or 0.1 percent, to $52.52 per barrel.

Traders said the declines came on lingering concerns over the health of the global economy.

"If we experience an economic slowdown, crude will underperform due to its correlation to growth," said Hue Frame, portfolio manager at Frame Funds in Sydney.

Most analysts have downgraded their global economic growth forecasts below 3 percent for 2019, with some even fearing a looming recession amid trade disputes and spiraling debt.

For now, however, there is hope that the trade war between Washington and Beijing may be resolved as global markets, including oil, took heart from talks between the two sides this week.

Despite Friday's price falls, Brent and WTI are set for weekly gains of more than 7 and 8 percent respectively.

Beyond global economics, oil markets are receiving support from supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) aimed at reining in a glut that emerged in the second-half of 2018.

A key reason for the emerging glut was the United States where crude oil production soared by more than 2 million barrels per day (bpd) in 2018 to a record 11.7 million bpd.

Consultancy JBC Energy this week said it was likely that U.S. crude oil production was already "significantly above 12 million bpd" by January 2019.

Given the overall supply and demand balance, Swiss bank Julius Baer said it was "price neutral" in its oil forecast.

"We see the oil market as well balanced into the foreseeable future, as the petro-nations make space for further U.S. shale production growth," said Norbert Ruecker, head of commodity research at the bank.

Oil slips on economic worries, but still set for strong weekly gain
 

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Tapio Välikangas
Tapio Välikangas Jan 10, 2019 10:40PM ET
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true price.?. Are you talking about mining costs or refinery expences, or delivery? How many fields would be pumping with 19 cents / gallon? or six dollars / bbl.
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Leroy Jenkins
Leroy Jenkins Jan 10, 2019 10:27PM ET
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Everybody should reset the algorithms to not include oil prices as a factor. Then oil could sell off without the markets selling off, the economy would benifit from 19 cent per gallon gas which would be the true price now.
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