Oil Rebounds Towards $81 but Weaker Demand View Weighs

Posted by Michelle Howard
Friday, October 12, 2018

Oil rebounded towards $81 a barrel on Friday as an equities rally lent support, though prices pared gains after a closely watched forecaster deemed supply adequate and the outlook for demand weakening.

Crude was still heading for its first weekly drop in five weeks, pressured by a big rise in U.S. inventories and fading concerns for now about looming U.S. sanctions aimed at cutting Iran's oil exports.

Global equities were set for their biggest daily gain in nearly a month. Declining equities amid wider risk-off investor sentiment had pressured oil on Thursday.

"A rebound in equity markets would help Brent to rebound from $80," said Petromatrix analyst Olivier Jakob, adding that a dip below $80 on Thursday did not clearly break that level as a source of technical support.

International benchmark Brent crude rose 65 cents to $80.91 a barrel by 1328 GMT, having dropped by 3.4 percent on Thursday. U.S. crude added 79 cents to $71.76.

Still, the monthly report by the International Energy Agency (IEA) on Friday weighed. The IEA said the market looked "adequately supplied for now" and trimmed its forecasts for world oil demand growth this year and next.

"This is due to a weaker economic outlook, trade concerns, higher oil prices and a revision to Chinese data," said the IEA, which advises industrialised countries on energy policy.

The IEA report is the latest government assessment to predict weaker demand ahead and conclude that supply is adequate. The Organization of the Petroleum Exporting Countries (OPEC) made a similar move on Thursday.

"The bearish alarm bells are ringing for next year's oil balance as market players brace for the return of a supply surplus," said Stephen Brennock of oil broker PVM.

A drop in U.S. oil production also lent prices some support. In the U.S. Gulf of Mexico, companies cut output by 40 percent on Thursday because of Hurricane Michael, even as some operators began returning crews to offshore platforms.

Michael made landfall in Florida on Wednesday as the third most powerful hurricane to strike the U.S. mainland, though it has since weakened to a tropical storm.

By Alex Lawler, Additional reporting by Aaron Sheldrick

Categories: Offshore Energy Shale Oil & Gas

Related Stories

Malaysia’s Petronas and Oman’s OQEP Strengthen Oil and Gas Ties

RINA Wins FEED Contract for Petronas’ Flagship CCS Project in Malaysia

Eni-Petronas Gas Joint Venture Up for Launch in 2026

Shell’s Brazil-Bound FPSO Starts Taking Shape

Ventura Offshore’s Semi-Sub Rig to Keep Drilling for Eni in Asia

Timor Gap Boosts Stake in Finder Energy’s Timor-Leste Oil Fields

Russia Targets 2028 for Sakhalin-3 Gas Project Start Up

Seatrium Secures ABS Backing for Deepwater FPSO Design

Hibiscus Petroleum Starts Drilling at Teal West Field off UK

Yinson Production Nets DNV Approval for New FPSO Hull Design

Current News

Malaysia’s Petronas and Oman’s OQEP Strengthen Oil and Gas Ties

Southeast Asia’s 2GW Cross-Border Offshore Wind Scheme Targets 2034 Buildout

Pharos Energy Kicks Off Drilling Campaign Offshore Vietnam

Viridien to Shed More Light on Malaysia’s Offshore Oil and Gas Potential

US Pressure on India Could Propel Russia's Shadow Oil Exports

Energy Drilling’s EDrill-2 Rig Starts Ops for PTTEP in Gulf of Thailand

RINA Wins FEED Contract for Petronas’ Flagship CCS Project in Malaysia

ABL Secures Rig Moving Assignment with India's ONGC

Pakistan, Türkiye Deepen Oil and Gas Ties with Offshore Indus-C Block Deal

Eni-Petronas Gas Joint Venture Up for Launch in 2026

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com