Oil Posts Biggest Weekly Drop Since July Amid Supply Concerns

Oil fell to a two-week low as the International Energy Agency warned of a looming supply glut.

Sheela Tobben

16 Sep 2019, 04:24 AM IST

Oil Posts Biggest Weekly Drop Since July Amid Supply Concerns

A droplet of petroleum drops from a fuel nozzle at a fuel pump. (Photographer: Andrey Rudakov/Bloomberg)

(Bloomberg) -- Oil fell to a two-week low as the International Energy Agency warned of a looming supply glut.

Futures in New York ended the week 3% lower after four straight days of declines. Sentiment continues to be dominated by an International Energy Agency report highlighting the challenge facing OPEC and its allies in balancing the market as production surges from their competitors. U.S. crude production is set to grow 1.3 million barrels a day next year at current prices, IEA’s executive director Fatih Birol said at an event in Washington D.C. Friday.

Also fueling oversupply concerns, U.S. President Donald Trump was said to weigh easing sanctions on Iran, a move that RBC Capital Markets estimated could bring back around 700,000 barrels a day to the market. Meanwhile, the U.S. and China showed signs of rapprochement in their trade war and Saudi Arabia’s new energy minister downplayed oil-demand concerns, leaving any talk of deeper output cuts to OPEC’s next ministerial meeting in December.

“Lackluster investor positioning, potential thawing of the trade war and concerns of an Iran deal have clouded both investor appetite as well as the fundamental market outlook,” said Michael Tran, a commodity strategist at RBC Capital Markets. “Oil prices are caught in a cycle of trendless volatility.”

West Texas Intermediate crude for October delivery declined 24 cents, or 0.4%, to settle at $54.85 a barrel on the New York Mercantile Exchange.

Brent for November fell 16 cents to $60.22 a barrel on the ICE Futures Europe Exchange, and traded at a $5.42 premium to WTI for the same month. The contract declined 2% for the week.

Other oil-market news:
Gasoline futures rose 1 cent to settle at $1.5531/gallon Oil exploration in the world’s biggest shale field shrank the most since the worst days of the 2014-2016 market crash, when crude teetered on the verge of a 12-year low and tens of thousands of roughnecks were cast out of work. A fire on at a vessel at Equinor ASA’s Sture oil terminal in Norway has been put out. Scott Sheffield, one of the earliest executives to recognize the Permian Basin’s potential, is scaling back his expectations for the world’s largest shale field. The storm system that’s spent the last two days raining down on the Bahamas, slowing its recovery from Hurricane Dorian, is likely to track along or near Florida’s coast on the weekend, then veer out to sea.

Other oil-market news:

Gasoline futures rose 1 cent to settle at $1.5531/gallon
Oil exploration in the world’s biggest shale field shrank the most since the worst days of the 2014-2016 market crash, when crude teetered on the verge of a 12-year low and tens of thousands of roughnecks were cast out of work.
A fire on at a vessel at Equinor ASA’s Sture oil terminal in Norway has been put out.
Scott Sheffield, one of the earliest executives to recognize the Permian Basin’s potential, is scaling back his expectations for the world’s largest shale field.
The storm system that’s spent the last two days raining down on the Bahamas, slowing its recovery from Hurricane Dorian, is likely to track along or near Florida’s coast on the weekend, then veer out to sea.

To contact the reporter on this story: Sheela Tobben in New York at vtobben@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Catherine Traywick, Mike Jeffers