13 September 2018, News Wires — Oil prices fell more than 2 percent on Thursday, with Brent slipping back from four-month highs as investors focused on the risk that emerging market crises and trade disputes could dent demand even as supply tightens.
The International Energy Agency warned that although the oil market was tightening at the moment and world oil demand would soon reach 100 million barrels per day (bpd) in the next three months, global economic risks were mounting.
“As we move into 2019, a possible risk to our forecast lies in some key emerging economies, partly due to currency depreciations versus the U.S. dollar raising the cost of imported energy,” the agency said.
“In addition, there is a risk to growth from an escalation of trade disputes,” the Paris-based agency said.
Brent crude oil fell $1.65, or 2 percent, to $78.09 per barrel by 2:10 p.m. EDT (1810 GMT). The global benchmark on Wednesday hit $80.13, its highest level since May 22.
U.S. light crude was down $1.82, or 2.6 percent, to $68.55 a barrel.
For both benchmarks, this was the biggest single day percentage drop in almost one month.
The market tumbled early in the session as investors focused on the bearish elements of the IEA report, said Bob Yawger, director of energy futures at Mizuho in New York.
Prices slipped again following a tweet by U.S. President Donald Trump in which he said that the United States was under no pressure to make a trade deal with China, Yawger said.
U.S. companies in China are being hurt by tariffs in the growing trade war between Washington and Beijing, according to a survey, prompting U.S. business lobbies to urge President Donald Trump’s administration to reconsider its approach.
The White House has invited Chinese officials to restart trade talks just as it prepares to escalate a trade war with China with tariffs on $200 billion worth of Chinese goods. For graphic on Iran oil exports to Asia, click tmsnrt.rs/2CEzade
Still, oil prices were up on the week, buoyed in earlier sessions by a larger-than-expected draw in U.S. crude inventories, weakness in the U.S. dollar and a reported fall in U.S. production, Commerzbank said in a note.
U.S. crude production fell by 100,000 bpd to 10.9 million bpd last week as the industry faces pipeline capacity constraints.
Though weekly output slipped, the United States likely surpassed Russia and Saudi Arabia earlier this year to become the world’s largest crude oil producer, based on preliminary estimates from the Energy Information Administration.
Although the EIA does not publish crude oil production forecasts for Russia and Saudi Arabia in its short term outlook, it expects that U.S. crude output will continue to exceed Russian and Saudi production for the remaining months of 2018 and through 2019.
Meanwhile, crude inventories at the storage hub at Cushing, Oklahoma, fell 1.6 million barrels between Sept. 7 and 11, traders said, citing Genscape data.
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