Published: Wed, August 15, 2018
Finance | By Gustavo Carr

IEA Warns Easing Oil Supply Concerns May Only Be Temporary

IEA Warns Easing Oil Supply Concerns May Only Be Temporary

Likewise, the oil for delivery in September contracts was trading higher by Rs 22, or 0.47 per cent to Rs 4,664 per barrel in 318 lots.

Oil prices dipped on Wednesday, weighed down by a report of increased USA crude inventories and as a darkening economic outlook stoked expectations of lower fuel demand.

Benchmark Brent crude oil was up 72 cents, or 1%, at $72.79 a barrel by 2:29 p.m. ET last Friday.

Moreover, Turkey's economic turmoil has raised concerns about a contagious crisis throughout emerging economies, which dented market expectations for the overall oil demand in the coming months.

Following a significant sell-off in emerging market currencies (such as the Turkish lira and the South African rand), traders are reacting to concerns that growth in emerging markets is decelerating.

Opec has revised down its forecast oil demand growth by 20,000 barrels a day from last month's report, to 1.64 million barrels a day this year.

"The high crude prices appear to have been taking a toll on demand", said Sukrit Vijayakar, Director of Indian oil consultancy Trifecta.

While the USA oil industry is experiencing a boom with the expansion of hydraulic fracturing techniques, energy drillers and fracking-related ETFs may slow down ahead with rising costs eating away at profits.

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Oil futures fell more than $2 a barrel on Wednesday after data showed US crude stockpiles jumped last week, compounding worries about a weaker global economic growth outlook.

Losses are being limited on light volume ahead of today's U.S. Energy Information Administration's weekly inventories report at 1430 GMT, which is expected to show a 2.6 million barrel draw.

The decision came after the United States President, Donald Trump, urged the group to act in order to prevent further increases, even amid looming American sanctions on Iran, OPEC's third-largest producer.

Phillip Futures said that hedge funds had cut bullish bets on oil because of “rising production levels from OPEC and the United States”.

Despite the cautious mood in oil markets, bullish sentiment found some support from expectations that USA sanctions against Tehran would restrict Iranian crude exports, tightening global supply.

Under pressure over rising gas prices, Trump in July called on the Organization of Petroleum Exporting Countries to bring down oil prices.

That comes after the country's main oil importer, Unipec, earlier this month suspended shipments from the United States. Iran is OPEC's third-largest oil producer - behind Saudi Arabia and Iraq - and now pumps around 3.65 million barrels per day, according to Reuters data.

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