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Business News/ Market / Stock-market-news/  Oil swings near $45 as signs of easing glut counter slower China
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Oil swings near $45 as signs of easing glut counter slower China

Futures headed for a second weekly advance as US inventories posted a second straight decline

Oil has plunged more than 25% from this year’s closing peak in June amid speculation a global glut that drove prices to a six-year low will be prolonged. Photo: AFPPremium
Oil has plunged more than 25% from this year’s closing peak in June amid speculation a global glut that drove prices to a six-year low will be prolonged. Photo: AFP

Seoul: Oil swung around $45 this week as investors grapple with conflicting signs of an easing glut and slowing growth in China.

Futures headed for a second weekly advance as US inventories posted a second straight decline and Total SA, Europe’s second-biggest oil company, trimmed its 2017 production target and announced further investment cuts and project delays. Prices were capped as Iran made progress on an accord to lift sanctions on its exports while a measure of manufacturing in China, the world’s second-biggest oil user, slumped to the lowest in more than six years.

Oil has plunged more than 25% from this year’s closing peak in June amid speculation a global glut that drove prices to a six-year low will be prolonged. US crude stockpiles remain almost 100 million barrels above the five-year seasonal average.

“We’ve been seeing a trend since September where the market experiences high volatility without a clear price direction," Hong Sung Ki, a commodities analyst at Samsung Futures Inc., said by phone from Seoul. “It is highly likely that the US stockpiles may increase next week as the market expects more refiners to shut down."

WTI for November delivery was at $45.31 a barrel on the New York Mercantile Exchange, up 40 cents, at 2:11pm Singapore time. The contract advanced 43 cents to $44.91 on Thursday. The volume of all futures traded was about 35% below 100-day average. Prices are up 1.4% this week.

US inventories

Brent for November settlement gained 35 cents to $48.52 a barrel on the London-based ICE Futures Europe exchange. Prices are up 2.2% this week. The European benchmark crude traded at a premium of $3.23 to WTI.

US crude supplies dropped by 1.9 million barrels to 454 million, the EIA reported on 23 September. Stockpiles were forecast to shrink by 1.25 million, according to the median estimate of eight analysts surveyed by Bloomberg. Daily output climbed by 19,000 barrels to 9.14 million.

Forecast cut

Total, Europe’s largest oil company after Royal Dutch Shell Plc, expects to produce 2.6 million barrels of oil equivalent a day in 2017 compared with a previous forecast of 2.8 million barrels a day. Growth will slow to 1% to 2% a year starting in 2019 from the current 6% to 7%, the company said on Wednesday.

A private Chinese manufacturing gauge fell to the lowest since March 2009. The preliminary Purchasing Managers’ Index (PMI) from Caixin Media and Markit Economics released on Wednesday showed a drop to 47.0 in September, missing the median estimate in a Bloomberg survey and indicating a seventh month of contraction.

The IAEA, the United Nations’ nuclear body, gained access on Sunday to an Iranian military site to which it had been denied entry since 2011. Once the assessment shows Iran complies with the terms of the agreement, sanctions against its financial and energy industries may be lifted.

Thirteen of 25 analysts and traders, or 52%, in a Bloomberg survey on Thursday were neutral on whether WTI will gain or decline. Bloomberg

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Published: 25 Sep 2015, 01:11 PM IST
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