Aug 22, 2019

Energy I Oil I Oil Price Report: Oil slips below $60, Jackson Hole summit in focus

3 minutes - Source: CNBC

RT: Petrobras oil tanks Brazil 190725
People pass in front of tanks of Brazil’s state-run Petrobras oil company in Brasilia, July 25, 2019.
Ueslei Marcelino | Reuters
Oil slipped below $60 a barrel on Thursday despite a drop in U.S. crude inventories and OPEC-led supply cuts as worries about the global economy weighed on crude prices.
Brent crude fell 45 cents to $59.85 a barrel  while U.S. West Texas Intermediate crude shed 42 cents to $55.26.
Traders on Thursday parsed through commentary from Federal Reserve officials delivered from Jackson Hole, Wyoming. Both Kansas City Federal Reserve President and Philadelphia President told CNBC they don’t believe further interest rate cuts are needed, fostering fears that the central bank won’t come to the rescue if the U.S. economy decelerates.
Still, the losses were limited given inventories data.
“Today prices are basically unchanged in the same relatively small range,” said Olivier Jakob of Petromatrix. “The focus now is going to be on Jackson Hole, I think, to the end of the week.”
U.S. crude inventories fell by 2.7 million barrels last week, more than analysts expected. Still, the U.S. Energy Information Administration also said gasoline and distillate inventories rose.
The price of Brent is up by 12 percent this year, supported by supply cuts led by the Organization of the Petroleum Exporting Countries, and export cuts in Iran and Venezuela which are under U.S. sanctions.
Iran on Wednesday said if its oil exports are cut to zero, international waterways would not have the same security as before, cautioning Washington against raising pressure on Tehran.
Still, lingering fears about slowdown in economic growth amid the U.S.-China trade dispute and Brexit has been pressuring prices and forecasters such as the International Energy Agency have been lowering forecasts for world oil demand.
U.S. President Donald Trump on Wednesday said he was “the Chosen One” to address trade imbalances with China, even as congressional researchers warned his tariffs would reduce U.S. economic output by 0.3% in 2020.
The Jackson Hole speech is important for oil as signals from the Fed on monetary easing affect the U.S. dollar. A weaker U.S. currency tends to support oil prices, and the dollar eased on Thursday against a basket of currencies.
Analysts warned markets could be volatile.
“With positioning in equities, bonds and energy all heavily weighted to this outcome, the resulting correction from a lack of Powell love could be both ugly and emotional,” said Jeffrey Halley, analyst at OANDA.

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