Markets

Oil posts biggest weekly loss in 5 months over equities

Oil posts biggest weekly loss in 5 months over equities

Brent crude settled up 17 cents a barrel at US$80.43, after dropping 3.4 per cent on Thursday.

Crude oil futures for November ended up $0.37, or 0.5%, at $71.34 a barrel.

"Nonetheless, our position is that expensive energy is back, with oil, gas and coal trading at multi-year highs, and it poses a threat to economic growth", said the report.

The IEA cut its estimate for global oil-demand growth for both 2018 and 2019 by about 110,000 barrels a day to 1.3 million and 1.4 million barrels a day respectively. U.S. crude added 45 cents to $71.42.

"The decline may deepen significantly ahead of US sanctions - and subsequently as final cargoes are delivered", said the IEA, which advises major oil consumers on energy policy. "The demand outlook is hurt right now because of the situation with the USA and China in particular", John Kilduff, a partner at Again Capital Management in NY, told Reuters. The week saw oil prices tumble on the back of higher inventories and weakness in the United States equity market.

Still, with impending USA sanctions on Iran set to cut the OPEC producer's oil exports, traders continue to worry about whether the Organization of Petroleum Exporting Countries will be able to offset potential production losses.

USA commercial crude oil inventories fell by 5.8 million barrels in the week to August 17 to 408.36 million barrels, the Energy Information Administration (EIA) said on Wednesday.

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Western Canada Select slumped below US$20 a barrel on Thursday, the lowest in more than two years, continuing a brutal streak of declines for the country's main grade of crude.

Members of the Organization of the Petroleum Exporting Countries (OPEC) and other exporters such as Russian Federation agreed in June to raise output as the market appeared increasingly tight.

On the oil front, US crude inventories rose by 6 million barrels last week, the Energy Information Administration said, more than double analysts' expectations of a 2.6 million-barrel increase.

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Fatih Birol, the IEA's executive director, said in a Bloomberg interview earlier this week that prices are "entering the red zone" that signals danger to consumption, and called on OPEC members with spare supplies to increase production. In the U.S. Gulf of Mexico, companies cut output by 40 per cent on Thursday because of Hurricane Michael, even as some began returning crews to offshore platforms.

Michael crashed ashore Florida on Wednesday as the third most powerful hurricane to strike the USA mainland.