Oil falls over 2% in the weaker demand growth

On Tuesday, oil prices fell more than 2%, weighed down from a weaker demand outlook and an increase in US crude inventories, despite OPEC’s prolonged OPEC supply cutbacks.

Brent gross futures, international oil price points, were down $ 1.54, or 2.47%, to $ 60.75 per barrel by 1110 GMT.

US raw earnings in West Texas were down $ 1.46 or 2.74% to $ 51.81.

As of Tuesday, the US Energy Information Administration has cut its forecasts for rising world oil demand 2019 and US crude production.

A sudden surge in US raw stocks also kept oil prices under pressure.

A PVM brokerage company on a daily note said, “Yesterday’s paralysis is paving the way for a fresh sliding of prices, while market players worry about a slowdown in US oil reserves swelling.”

US crude inventories grew by 4.9 million barrels in the week closed from 7 to 482.8 million barrels, data from the US Department of Oil showed on Tuesday. This compared with analyst expectations for a drop of 481,000 barrels.

Trade tensions between the United States and China, the world’s two largest oil consumers, also weighed on prices. US President Donald Trump said he was holding a trade deal with China.

European shares withdrew from the three-week upswing on Wednesday, as this month’s rally came from steam on the back of soft Chinese activity and trade friction.

Hedge funds managers are liquidating bullish oil positions at the fastest pace since the fourth quarter of 2018.

With the upcoming meeting of the Organization of Petroleum Exporting Countries set up by the end of June, the market is looking at whether the world’s largest oil producers will lengthen their supply cuts.

OPEC, along with non-members, including Russia, have restricted their oil production by 1.2 million barrels a day since the beginning of the year to support prices.

Goldman Sachs said in a note that an unclear macroeconomic picture and unsustainable oil production from Iran and others could lead OPEC to seize supplies cuts.

Goldman said, “We expect such a result to be only modestly supportive of prices with our Brent forecast of the third quarter at $ 65.5 a barrel.”

United Arab Emirates Energy Minister Suhail bin Mohammed al-Mazroui said on Tuesday that OPEC members were close to reaching an agreement on continued cuts in output.

OPEC will meet on June 25, followed by talks with its Russia-led allies on 26 June. But Russia suggested a change date from 3 to 4 July, sources within the group earlier told Reuters./Investing.com

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