Oil rises after drone attack on Saudi field
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[August 19, 2019] By
LONDON (Reuters) - Crude oil prices rose on
Monday following a weekend attack on a Saudi oil facility by Yemeni
separatists and as traders looked for signs that U.S.-China trade
tensions could ease.
Price gains were, however, capped to some degree by an unusually
downbeat OPEC report that stoked concerns about growth in oil demand.
Brent crude <LCOc1>, the international benchmark for oil prices, was up
65 cents, or about 1.1%, at $59.29 a barrel at 1024 GMT,
U.S. West Texas Intermediate (WTI) crude futures <CLc1> were up 61
cents, or 1.1%, at $55.48 a barrel.
A drone attack by Yemen's Houthi group on an oilfield in eastern Saudi
Arabia on Saturday caused a fire at a gas plant, adding to Middle East
tensions, but state-run Saudi Aramco said oil production was not
"The oil market seems to be pricing in again a geopolitical risk premium
following the weekend drone attacks on Saudi Arabia, but the premium
might not sustain if it does not result in any supply disruptions," said
Giovanni Staunovo, oil analyst for UBS.
Tensions around Iran appeared to ease after Gibraltar released an
Iranian tanker it seized in July though Tehran warned the United States
against any new attempt to seize the tanker in open seas.
Concerns about a recession also limited crude price gains, as traders
looked for signs of progress in U.S.-China trade talks.
Meanwhile, China's announcement of key interest rate reforms over the
weekend has fueled expectations of an imminent reduction in corporate
borrowing costs in the struggling economy, boosting share prices on
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A pump jack operates in the Permian Basin oil and natural gas
production area near Odessa, Texas, U.S., February 10, 2019. Picture
taken February 10, 2019. REUTERS/Nick Oxford
U.S. energy firms this week increased the number of oil rigs operating
for the first time in seven weeks despite plans by most producers to cut
spending on new drilling this year.
"WTI in recent weeks has performed relatively better than Brent...
Pipeline start ups in the United States have been supportive for WTI,
while the ongoing trade war has had more of an impact on Brent," said
Warren Patterson, head of commodities strategy at Dutch bank ING.
The Organization of the Petroleum Exporting Countries (OPEC) cut its
forecast for global oil demand growth in 2019 by 40,000 barrels per day
(bpd) to 1.10 million bpd and indicated the market would be in slight
surplus in 2020.
It is rare for OPEC to give a bearish forward view on the market
"Such a bearish prognosis will heap more pressure on OPEC to take
further measures to support the market," said Stephen Brennock of oil
(Additional reporting by Jessica Jaganathan in Singapore; editing by
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