Oil mixed amid macroeconomic concerns but set to end quarter up 30%

FILE PHOTO: An Aramco employee walks near an oil tank at Saudi Aramco's Ras Tanura oil refinery and oil terminal

An Aramco employee walks near an oil tank at Saudi Aramco’s Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. REUTERS/Ahmed Jadallah/File Photo Acquire Licensing Rights

Sept 29 (Reuters) – Oil prices were mixed on Friday in a volatile trading session due to macroeconomic concerns and profit taking, but were set to rise about 30% in the quarter as OPEC+ production cuts squeezed global supply.

Front-month Brent November futures were up 5 cents at $95.43 per barrel at 12:22 p.m. EDT (1722 GMT) ahead of the contract’s expiry later in the day. The more liquid Brent December contract was down 11 cents to $92.99 per barrel.

U.S. West Texas Intermediate crude (WTI) was down 4 cents, or 1%, to $81.57 per barrel.

WTI futures were up $1 a barrel earlier in the session, before swinging lower to trade $1 below Thursday’s close price. WTI is set to climb 1% and Brent 2.5% on the week.

With oil futures inching closer to the $100 a barrel threshold, investors could be taking stock of the current rally given ongoing macroeconomic concerns.

“WTI has been the belle of the ball, but today it’s losing its lustre,” said John Kilduff, partner at Again Capital LLC in New York, citing profit taking and economic concerns.

In the third quarter, Brent crude futures are set to rise 27%, while U.S. crude futures should settle 30% higher.

Investors may be looking ahead to a potential partial U.S. government shutdown on Sunday. A shutdown would be an “unnecessary risk” to a resilient U.S. economy, top White House economic adviser Lael Brainard said on Friday.

Worries about the Chinese economy also intensified on Friday as shares of indebted property developer Evergrande Group (3333.HK) were suspended until further notice following a report that its chairman had been placed under police watch.

U.S. consumer spending increased 0.4% in August, while personal consumption expenditures (PCE) price index data showed that inflation excluding volatile food and energy prices slowed to 0.1% last month from 0.2% in July.

The OPEC+ ministerial panel meeting will take place on Oct. 4.

“Next week’s OPEC meeting will be a key update for the market, with increasing probability the voluntary supply cuts by Aramco are reduced,” National Australia Bank analysts said in a client note, referring to Saudi Arabia’s state oil producer.

Brent is forecast to average $89.85 a barrel in the fourth quarter and $86.45 in 2024, according to a survey of 42 economists compiled by Reuters on Friday.

The supply cuts announced by Saudi Arabia and Russia are expected to dominate oil prices for the remainder of this year.

However, a run towards $100 per barrel could be short-lived because of “the artificial nature of supply shortages in the system, and the fragile macro environment”, said Suvro Sarkar, energy sector team lead at DBS Bank.

Additional reporting by Robert Harvey, Katya Golubkova; Editing by Sonali Paul, Mark Potter, Paul Simao and Jan Harvey

Our Standards: The Thomson Reuters Trust Principles.

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Reports on oil and energy, including refineries, markets and renewable fuels. Previously worked at Euromoney Institutional Investor and CNN.


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