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Oil eases as global demand concerns return, overshadowing Saudi supply doubts

Published 24/09/2019, 03:03
Oil eases as global demand concerns return, overshadowing Saudi supply doubts
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By Florence Tan

SINGAPORE (Reuters) - Oil prices eased in early Asian trade on Tuesday as weak manufacturing data from Europe and Japan focused market attention on a gloomy outlook for demand, though lingering uncertainty over Saudi supply disruption braked the drop.

Brent crude futures (LCOc1) fell 29 cents to $64.48 a barrel by 0154 GMT, while U.S. West Texas Intermediate (WTI) futures (CLc1) were at $58.40, down 24 cents.

"The demand side of the equation is back in focus," Michael McCarthy, senior market analyst at CMC Markets in Sydney said, pointing to sluggish manufacturing numbers in leading economies in Europe as well as Japan.

"That's why we're seeing a little bit more (downward) pressure on Brent than West Texas at the moment."

Still, oil prices remained at comparatively elevated levels for the year in the wake of the mid-month attack on Saudi Arabia's largest oil processing facility that halved output at the world's top oil exporter.

Reuters reported that Saudi Arabia has restored more than 75% of crude output lost after attacks on its facilities and will return to full volumes by early next week. But the Wall Street Journal reported on Monday that repairs at the plants could yet take months longer than anticipated.

European powers - Britain, Germany and France - backed the United States in blaming Iran for the Saudi oil attack, urging Tehran to agree to new talks with world powers on its nuclear and missile programmes and regional security issues.

Meanwhile a preliminary Reuters poll found on Monday that U.S. crude oil and distillate stockpiles were expected to have dropped last week.

Seven analysts polled by Reuters estimated, on average, that crude inventories fell 800,000 barrels in the week to Sept. 20.

The poll was conducted ahead of key reports from the American Petroleum Institute, an industry group, to be released on Tuesday and from the Energy Information Administration on Wednesday.

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