Oil edges up as global markets steady and lower demand tempers gains

“The growth story is now more or less a US growth story. The rest of the world isn’t playing along any longer,” said Saxo Bank commodities strategist Ole Hansen. “It also really reflects how the theme in the commodities market has so quickly changed from being one where the worry was about supply, with Iran sanctions for oil or Chilean [miner] strikes for copper, and now the focus is on demand.”

On the supply front, US data on Wednesday showed crude output rose by 100,000 barrels per day (bpd) to 10.9-million bpd in the week ending August 10. Crude inventories increased by 6.8-million barrels, representing the largest weekly rise since March last year.

“This build certainly hasn’t helped market sentiment,” Dutch bank ING said after the release of the US Energy Information Administration (EIA) report. While supply rises in the US, Asian markets are showing signs of slowdown as trade disputes and a stronger dollar drag on the economies of some of the world’s largest oil buyers.

“This balance [between supply and demand] … has a profound influence on global and regional oil stocks. Ultimately, it is the latter that determines oil prices,” said PVM Oil Associates strategist Tamas Varga. “Get that right and you will have a good idea what to expect for months and years ahead.”

Providing some support for Brent crude were looming US sanctions against Iran’s oil exports, set to start from November. Iran’s biggest customers, such as India, South Korea and Japan, are already scaling back orders.

Reuters