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Oil Ends Week Higher as Supply Threats Outweigh Doubts on Demand


By Alex Nussbaum

(Bloomberg) Oil finished higher for the week after a volatile trading session that pitted gnawing doubts about global demand against supply threats from the Middle East and beyond.Futures gained 0.3% in New York on Friday and ended the week up 1%, reversing from last week’s steep loss. Oil turned higher after Mexico’s state-run oil company said crude output fell about 10% in the second quarter, adding to tensions after Iran reportedly tested a medium-range ballistic missile in the Persia Gulf region.

Oil notches weekly gain as Iran tensions linger

“The market is leaning into the upside, probably pricing in a little more geopolitical risk premium,” said Phil Flynn, a senior markets analyst at Price Futures Group Inc. “People are going to be hesitant to be short over the weekend with all the Middle East tensions.”

But crude remains down almost 4% for the month amid fears about sluggish demand growth. The U.S. Commerce Department on Friday said gross domestic product expanded by an annualized 2.1% in the second quarter as trade disputes sapped exports and business investment. Growth was down from the first quarter although still better than forecast.

“The headline number looks OK but the underlying statistics reflect the weakness,” said Cailin Birch, a global economist at the Economist Intelligence Unit in London. “It’s a sign that economic growth is definitely slowing, so the question is when do we start to feel the real pain?”

West Texas Intermediate for September closed up 18 cents at $56.20 a barrel, notching its fifth increase in six days on the New York Mercantile Exchange. Brent for September settlement gained 7 cents to $63.46 on the ICE Futures Europe Exchange.

See also: Permian Oil Prices Dip to 2-Month Low as West Texas Stocks Swell

Iran test-fired a ballistic missile that traveled 1,000 kilometers (620 miles), escalating tensions after a series of attacks on tankers and drones. The missile didn’t pose a threat to shipping in the region, CNN Pentagon correspondent Barbara Starr tweeted, citing an unnamed U.S. official.

While U.S. crude stockpiles dropped by 10.8 million barrels in a report this week — offering another sign of shrinking supplies — the large decline was mostly attributed to the short-term impact of Hurricane Barry, which halted output from parts of the Gulf of Mexico. U.S. production slid the most since October 2017.

Other oil-market news
  • Gasoline futures fell 0.3% to $1.8744.
  • Chevron Corp. and four oil services companies won a last-minute U.S. government reprieve to continue producing oil in Venezuela despite sanctions placed on the crisis-stricken country.
  • Oil explorers in the U.S. scaled back drilling activity as investors continued to demand capital discipline.


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