Published: Thu, June 13, 2019
Markets | By Otis Pena

Oil extends gain on supply cut, weak economy strains outlook

Oil extends gain on supply cut, weak economy strains outlook

"These countries account for more than three-fourths of our oil demand growth assumptions for this year and the revisions imply a 300,000 barrels per day reduction in our current global oil demand outlook of 1.3 million barrels per day year-on-year for this year", the British bank said.

Brent crude futures, the global benchmark for oil prices, fell $1.33, or 2.1%, to $60.96 a barrel by 1:09 p.m. EDT (1709 GMT).

West Texas Intermediate crude for July delivery was last seen up US$0.65 to US$53.91 per barrel while near month Brent crude rose US$0.38 to US$62.67.

Traders said crude oil futures on Tuesday were pushed up by a broader lift in financial markets after Beijing eased financing rules to stem an economic downturn.

The Organisation of the Petroleum Exporting Countries (OPEC) and some non-affiliated producers including Russian Federation, known collectively as OPEC+, have withheld supplies since the start of the year to prop up prices.

"We have to analyse order to take a balanced decision in July" he said, referring to a key meeting of the so-called Opec+ alliance between Opec members and other oil producing countries including Russian Federation.

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Earlier, Russian Finance Minister Anton Siluanov said that the price of oil could drop to $30 a barrel if OPEC and its partners fail to agree on extending the production cuts that now expire at the end of June.

Despite this, MacPherson said "there is a limit to how much longer it (OPEC+) can continue to avoid addressing the serious challenge of being squeezed out by growing U.S. production".

Saudi Arabia and Russian Federation work on a bilateral basis as well as with other producing countries to prevent oil prices from plunging, visiting Saudi Arabian Minister of Energy, Industry and Mineral Resources Khalid Al-Falih said here Monday.

Oil has tumbled from a 2019 peak above $75 a barrel in April to $61 a barrel now on concerns about weakening demand due to a U.S.

At 485.5 million barrels, USA commercial stocks were at their highest since July 2017 and about 8% above the five-year average for this time of year, the EIA said.

"With a production cut extension now sounding more likely than not, it should be incredibly supportive for oil prices", said Stephen Innes, managing partner at Vanguard Markets.

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