Oil edges above $62 as OPEC cuts counter growth concerns
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[June 11, 2019]
By Alex Lawler
LONDON (Reuters) - Oil edged further above
$62 a barrel on Tuesday as firmer equities and expectations OPEC and its
allies will keep withholding supply countered concern about slowing
economies and demand.
Russia said on Monday it might support an extension of OPEC-led supply
cuts that have been in place since January, while equities rose after
China eased financing rules to stem an economic downturn, giving oil a
Brent crude, the global benchmark, rose 9 cents to $62.38 a barrel at
1013 GMT. U.S. West Texas Intermediate was up 38 cents at $53.64.
"Prices are finding support from the prospect of OPEC oil production
remaining restricted beyond mid-year," said Carsten Fritsch, an analyst
Still, the price of Brent is down almost 20% from its 2019 peak above
$75 a barrel in April, pressured by an economic downturn that has
started to impact oil demand.
"Even planned and unintentional supply restrictions of more than 4
million barrels per day (bpd) have not been able to support prices as
economic considerations took over in the last two weeks," said Tamas
Varga of oil broker PVM. "The immediate price outlook remains anything
The Organization of the Petroleum Exporting Countries (OPEC) and some
allies including Russia, known collectively as OPEC+, have been
withholding supplies since the start of the year to prop up prices.
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Pumpjacks are seen against the setting sun at the Daqing oil field
in Heilongjiang province, China December 7, 2018. REUTERS/Stringer
OPEC+ is due to meet in late June or early July to decide whether to extend the
pact. Russia's comments on Monday, and remarks last week from Saudi Arabia,
bolstered expectations the deal will be renewed.
While the talk of prolonged supply restraint is supporting prices, concern about
slowing demand and economic growth has had a bigger impact on sentiment.
"It is proving hard work papering over a suite of rather less supportive data
being digested by the market," said analysts at JBC Energy in Vienna.
Analysts expect fuel consumption to stutter along with the global economy.
Energy consultancy FGE said global crude demand growth could drop below 1
million barrels per day (bpd) in 2019 from the 1.3 to 1.4 million bpd expected
OPEC+ has been trying to stop inventories building up and the latest weekly
reports from the United States are expected to show a small, 500,000-barrel
decline in stocks.
Analysts estimate that crude inventories fell 500,000 barrels last week. The
American Petroleum Institute (API), an industry group, issues its report at 2030
(Additional reporting by Henning Gloystein; editing by Kirsten Donovan and
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