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Oil prices extend losses after JP Morgan cuts forecast

Reuters  |  NEW YORK 

By Jessica Resnick-Ault

(Reuters) - prices fell on Friday as concerns about surging U.S. output and falling demand in weighed on the contract and cut its price forecast.

Brent crude futures fell 66 cents to $76.66 a barrel by 1:32 p.m. EDT [1732 GMT]. U.S. Intermediate (WTI) crude futures recovered some earlier losses to trade 25 cents lower at $65.71. For the week, Brent was set to fall 0.2 percent, while U.S. crude was little changed.

Crude prices came under pressure after data suggested Chinese demand was waning and concerns lingered about growing U.S. output.

cut its 2018 crude forecast for WTI by $3 to $62.20 a barrel, traders said. The did not immediately respond to a request for the report.

The futures contracts dipped after the forecast was issued, and then pared losses.

China's May imports eased away from a record high hit the previous month, customs data showed, with state-run refineries entering planned maintenance.

May shipments were 39.05 million tonnes, or 9.2 million barrels per day (bpd). That compared with 9.6 million bpd in April.

Further weighing on prices has been rising U.S. output, which hit another record last week at 10.8 million bpd.

U.S. drillers added one rig in the week to June 8, bringing the total count to 862, the highest level since March 2015, General Electric Co's firm said in its closely followed report on Friday.

The surge in U.S. production has pulled down WTI into a discount versus Brent of more than $11 a barrel, its steepest since 2015.

MARKET STILL TIGHT

Despite Friday's decline, Brent remains more than 15 percent above its level at the start of the year.

U.S. investment Jefferies said the crude market is tight and spare capacity could dwindle to 2 percent of demand in the second half of 2018, its lowest level since at least 1984.

Markets have been tightened by supply trouble in Venezuela, where company is struggling to clear a backlog of about 24 million barrels of crude waiting to be shipped to customers.

More generally, Brent has been pushed up by the voluntary production cuts put in place last year, led by the Organization of the Petroleum Exporting Countries (OPEC) and

OPEC and meet on June 22/23 to discuss production policy.

On Friday, OPEC's third-largest criticised a U.S. request that pump more oil to cover a drop in Iranian exports and predicted that OPEC would not heed the appeal.

Headlines on OPEC members' plans for the meeting later this month will lead to volatile market swings, said Tariq Zahir, managing member of in

"I think it is going to be very choppy," he said.

(Additional reporting by and in London, Henning Gloystein in Singapore; Editing by and Phil Berlowitz)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, June 08 2018. 23:37 IST
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