Published: Fri, January 24, 2020
Markets | By Otis Pena

Oil prices slip amid over-supply worries

Oil prices slip amid over-supply worries

Distillate, too, saw inventories increase, by 3.5 million barrels for the week, adding onto last week's large 6.8-million barrel build, while Cushing inventories fell by 429,000 barrels.

The supervisor of the IEA, Fatih Birol, stated in an interview that he supposes the market will be in excess by almost 0.99 million barrels per day in the early ix months of the year.

The upcoming estimate, which will be released later on Thursday, stands at a negligible -0.1 million, but an unexpected reading could affect US crude prices.

Any supply disruptions could be offset by increased output from the Organization of the Petroleum Exporting Countries (OPEC), which could limit the impact on global oil markets, the head of Japan's petroleum industry body said. Additionally, more than 540 cases of the new virus have been confirmed and authorities in Wuhan have shut transportation networks and are urging residents not to leave to help prevent the contagion spreading.

At 16:00 GMT, the U.S. Energy Information Administration will release its latest weekly inventories report.

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Should the virus develop dramatically and hit travel and growth, demand for oil could fall by 260,000 bpd, Goldman Sachs said in a note.

"It's the reason that recent incidents we have seen - with the Iranian general killed, Libya unrest - didn't boost worldwide oil prices", he explained.

"Demand concerns over a potential epidemic will counter concerns around supply disruptions in Libya, Iran and Iraq, driving spot price volatility in coming weeks", Goldman said, although the "impact on oil fundamentals remains limited so far".

Meanwhile, Kazakhstan has suspended its oil exports to China after contamination was found in crude supplied by a Kazakh producer less than a year after a "dirty oil" crisis broke in neighbouring Russian Federation.

U.S. crude oil production remained level during the week ending January 17, U.S. Energy Information Administration (EIA) said Thursday.

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