Oil prices fall as recession fears persist, tight supply limits losses

MELBOURNE, July 4 (Reuters) – Oil prices fell in early Asian trading Monday, dampening gains from the previous session as fears of a global recession weighed on the market, even as supply remains tight amid lower OPEC output, unrest in Libya and sanctions against Russia.

Brent crude futures fell 35 cents, or 0.3%, to $111.28 a barrel at 0016 GMT, after rising 2.4% on Friday.

US West Texas Intermediate (WTI) crude futures also fell 32 cents, or 0.3%, to $108.11 a barrel, after rising 2.5% on Friday.

Register now for FREE unlimited access to Reuters.com

While fears of a recession have weighed on the market over the past two weeks, supply concerns persist, preventing stronger price falls.

“Energy markets remain fraught with specific supply risks that make it a nerve-wracking experience to fall short,” said Commonwealth Bank commodities analyst Tobin Gorey.

The production of the 10 members of the Organization of the Petroleum Exporting Countries (OPEC) fell 100,000 barrels per day (bpd) in June to 28.52 million barrels per day – far short of their promised increase of about 275,000 barrels per day , a Reuters study found. read more

Declines in Nigeria and Libya offset increases by Saudi Arabia and other major producers, and Libya faces further supply disruptions due to escalating political unrest.

“This makes the group (OPEC)’s chances of meeting the new increased production quotas even more unlikely,” ANZ Research analysts said in a note.

Libya’s exports have fallen to between 365,000 bpd and 409,000 bpd, down about 865,000 bpd from normal levels, the National Oil Corp. said last week.

As further supplies, a planned strike by Norwegian oil and gas workers this week could cut the country’s oil and condensate production by 130,000 barrels per day. read more

Traders will want to watch the official August prices of Saudi Arabia’s largest oil exporter for signs of how tight the market is, as refineries brace for another soaring close to May’s record highs.

Nine refining sources polled by Reuters expected the official sale price of Saudi’s flagship Arab Light crude could rise about $2.40 a barrel from the previous month. read more

Register now for FREE unlimited access to Reuters.com

Reporting by Sonali Paul in Melbourne; Editing by Kenneth Maxwell

Our Standards: The Thomson Reuters Trust Principles.

Leave a Comment