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Oil Trades Near $43 Though IEA Casts Doubt on Demand Outlook


By Elizabeth Low and Alex Longley

(Bloomberg) Oil was steady near $43 a barrel after the International Energy Agency cut forecasts for global oil demand.

Futures in New York edged higher though the agency reduced its estimates for almost every quarter through to the end of next year, citing the muted outlook for air travel. Russia’s energy minister said the market is stabilizing and that OPEC+ plans no sharp moves.

Prices have been trading near a five-month high in recent sessions as U.S. crude inventories declined for a third week. While gasoline demand in America is recovering, the picture for oil products has been far more mixed in other corners of the globe as the pandemic continues to spread. The IEA’s report followed those from OPEC and the U.S. Energy Information Administration earlier in the week, both of which included revised views on U.S. oil production.

Futures rally amid third straight weekly decline in U.S. stockpiles

“Three oil market reports are driving one conclusion: caution,” said Ole Hansen, head of commodities strategy at Saxo Bank. “We are not out of the woods just yet and the three all highlight the continued uncertainty in predicting the short-to-near-term future.”

Prices
  • West Texas Intermediate for September delivery rose 0.2% to $42.74 a barrel at 10:10 a.m. in London
    • It closed at $42.67 on Wednesday, the highest since March 5
  • Brent for October settlement gained 0.2% to $45.51 a barrel

In a sign of continued weak demand, a company majority-owned by Royal Dutch Shell Plc said it will shut a 110,000 barrel-a-day refinery in the Philippines. On Wednesday, America’s biggest fuelmaker said it plans to turn one of its refineries into a renewables plant.

Iranian forces used two ships and a helicopter to board a tanker called the Wila in international waters, U.S. Central Command said in a tweet on Wednesday. The ship was most recently near the Strait of Hormuz. It was released and the U.S. military was not involved in anything other than monitoring, Reuters reported, citing an unidentified official with knowledge of the matter.

Other oil-market news
  • Saudi Arabia’s state oil company plans to cut capital expenditure to $25 billion or less next year, about half the amount it was originally planning, according to people familiar with the matter.
  • India’s state-owned oil majors have stopped hiring Chinese tankers to ship their crude and petroleum products after relations deteriorated between the two countries, although the move is unlikely to impact trade flows.
  • The latest sign of a worldwide energy transition: Massive oil refineries across the western U.S. are being converted into biofuel plants.


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