Oil slips further below $58 as economic gloom weighs

Oil slipped further below $58 a barrel on Thursday, pressured by concerns about global economic growth. "It is
03 Oct, 2019
  • Oil slipped further below $58 a barrel on Thursday, pressured by concerns about global economic growth.
  • "It is simply impossible to predict where the next significant price support will come from as the focus is firmly on economic developments,"

Euro zone business growth stalled in September, a survey on Thursday showed, a day after the US announced import tariffs on European Union products.

US crude inventories rose 3.1 million barrels last week, more than forecast.

"It is simply impossible to predict where the next significant price support will come from as the focus is firmly on economic developments," said Tamas Varga of oil broker PVM.

"And those are anything but optimistic," he added.

Brent crude fell 13 cents to $57.56 a barrel by 1100 GMT, after tumbling 2pc in the previous session. US West Texas Intermediate (WTI) crude dropped 13 cents to $52.51.

Lending oil some support were hopes that the United States and China might make progress in resolving their trade dispute and figures showing output in the United States - which has been the fastest source of supply growth - fell in July.

"Next week US-China trade talks remain the unknown variable which could lend a modicum of support," said Stephen Innes, market strategist at AxiTrader. The talks are set to resume on Oct. 10.

This year, Brent has risen about 7pc, supported by supply cuts led by the Organization of the Petroleum Exporting Countries and allies including Russia, plus involuntary outages such as a drop in Iranian and Venezuelan exports due to US sanctions.

Nonetheless, concern about the worsening economic outlook has overshadowed support from the supply side and the prospect of further output disruption in the Middle East appears of limited concern to investors.

Brent spiked to $72 a barrel on Sept. 16 following attacks on Saudi Arabian oil installations that shut more than half of the country's output. But Brent is now below the pre-attack level after the Saudi authorities resumed output.

"Crude oil does not want to price a geopolitical premium," said Olivier Jakob, analyst at Petromatrix. "With the lack of strong economic data it is difficult to develop a bullish theme.

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