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Oil prices dip as demand stalls, but U.S. supported by rig cut
Published in Amwal Al Ghad on 14 - 09 - 2015

Oil prices dipped on Monday in Asia as weakening demand weighed on markets, although U.S. futures received some support from reduced American drilling.
Front-month Brent crude futures were down 29 cents at $47.85 per barrel at 0649 GMT, although U.S. crude futures were at $44.62, nearly flat with their last settlement.
The U.S. oil rig count fell by 10 to 652 last week, the second straight weekly drop, while reserves at its main oil storage site in Cushing, Oklahoma, have fallen five of the past seven weeks, pushing U.S. physical crude into multi-year record premiums over futures prices.
The International Energy Agency said that ongoing production cuts would lead to a rebalancing of the market by next year.
Yet several banks said the immediate outlook remained weak.
"Both the supply and demand pictures look less favorable over the coming months ... Outside the U.S., oil fundamentals appear to be slipping seasonally," Morgan Stanley said on Monday, adding that there was potential for floating storage within the second half of 2015.
"Most producers seem to be coming around to the fact that 2016 oil and gas prices are unlikely see a significant recovery in 2016," Barclays said.
Macquarie noted that falling global auto sales in August, down 1 percent in August and 0.8 percent in July, were dragging on demand.
In part due to oversupply and to defend market share, Kuwait set its October Official Selling Price for crude to Asia 60 cents lower than September, at a discount of $1.95 a barrel to Oman/Dubai levels, the steepest in a decade.
OPEC's monthly market report will be published later on Monday.
Cheap oil undermines the health of energy firms, which have already seen big share devaluations since oil started falling in 2014.
"The trajectory of the (oil price) recovery keeps getting shallower as our expectations for OPEC output shifts up... The financial condition of the sector deteriorates further through 2017," Jefferies bank said.
"We are lowering our Brent oil price forecast by 9 percent to $54 per barrel (bbl) in 2015, 10 percent to $61/bbl in 2016 and 6 percent to $73/bbl in 2017," Jefferies said.
Traders will this week eye U.S. monetary policy as the Fed on Wednesday kicks off a two-day policy meeting.
Should interest rates be raised, analysts expect oil to fall as demand is hit due to higher import prices for countries not using the dollar.
Source: Reuters


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