Oil futures sank last Friday, including the United States’ crude, which went down almost 3%. This plunge is in anticipation of the hurricane close Florida coast, which can reduce demand. Prices, however, were still posed for its most substantial weekly gain since the start of July, backed up by the softening trade conflict between the U.S. and China.
Brent futures LCOc1 dropped 65 cents (1.1%) and ended at per barrel cost of $60.43. Meanwhile, U.S. WTI futures CLc1 finished at $1.61 (2.8%), or per barrel cost of $55.10.
Hurricane Dorian accumulated strength while it drew nearer to the coast of Florida on Friday. This scenario increased the risks that powerful winds, heavy rains, and a storm surge will hit the state for an extended period once it landfalls early in the coming week.
John Kilduff, a partner at New York-based Again Capital, said that the new modeling showed that Hurricane Dorian is looking to avoid the Mexican Gulf. Instead, it will rake the entire Florida state, making it a demand diminishing scenario rather than be a supply affecting occurrence.
The output of the U.S. crude oil dove for the second consecutive last June, falling around 33,000 bpd to around 12.08 million bpd (barrels per day), according to the monthly report released by the U.S. EIA (Energy Information Administration) last Friday.
Due to signal of an upcoming production, the U.S. power companies sliced twelve oil rigs for the week up to Aug. 30. The entire count was brought down to 742, according to the energy services arm of Baker Hughes from General Electric Co’s (GE.N) last Friday. The full rig count dove for its ninth consecutive month, reaching its lowest state since January 2018.
On the other hand, OPEC’s (Organization of the Petroleum Exporting Countries) oil output increased to 80,000 bpd last August. The event is its first monthly rise in the current year, according to a survey from Reuters. OPEC+, an alliance involving Russia and additional non-member countries, agreed on last December to cut supply around 1.2 million in the current year.
The oil production of Russia last August was slightingly at a higher level than what was stated in the agreement with OPEC+. Nevertheless, Moscow is looking to abide wholly with the deal, Interfax news bodies and RIA quoted Alexander Novak, Energy Minister of Russia, as saying.
Prices of oil have sunk almost 20% after hitting its peak last April 2019. The drop is mainly associated with concerns that the trade between the U.S. and China can dampen the world’s economy and reduce oil demand.
In August solely, WTI recorded a monthly dip of 6% while Brent sank by 7.3%. However, in the current week, the former increased around 1.7% while the latter around 1.8%. Both increases are attributed to anticipation of the trade issues between U.S-China, the globe’s two largest oil buyers, softening.
The U.S and Chinese trade negotiating bodies are keeping effective talks, Foreign Ministry of China told in a news conference last Friday in Beijing.
Reuters’ poll on selected analysts cut price anticipations for Brent at a median of $65.02 for 2019. This average is the lowest expected in over 16 months, relating it to the weakening demand due to the slowdown of the economy and the ongoing trade war.