Oil prices fall due to weak economic data, Saudi output recovery
Oil prices fell today after weak manufacturing data from Europe and Japan focused market attention on a gloomy outlook for demand.
The drops also came as Saudi Arabia said it could restore oil output faster than anticipated following attacks last week.
Brent crude futures dropped 95 cents to $63.82 a barrel today, while US West Texas Intermediate futures were at $57.91, down 73 cents.
Reuters said yesterday that Saudi Arabia had restored more than 75% of crude output lost after attacks on its oil installations and would return to full volumes by early next week.
But the Wall Street Journal said repairs at the plants could take months longer than anticipated.
“An increasing number of reports pointing to Saudi Aramco purchasing external products and potentially also crude to meet its term commitments do not give the impression that an imminent return to full capacity is in sight,” consultancy JBC Energy said.
State-run oil company Aramco has stepped up purchases of products such as naphtha, gasoline and diesel from Europe and elsewhere.
Still, oil prices remain at comparatively elevated levels for the year in the wake of the September 14 attack on Saudi Arabia’s largest oil-processing facility that halved output in the world’s top oil exporter.
An increase in US oil exports to Asia to replace Saudi crude and a reduction in US imports from Iraq meant crude inventories in the US could be lower than expected, said Mike Tran, commodity strategist at RBC Capital Markets.
European powers – Britain, Germany and France – backed the US in blaming Iran for the Saudi attack, urging Tehran to agree to new talks with world powers on its nuclear and missile programmes and regional security.
Meanwhile, a preliminary Reuters poll this week found that US crude oil and distillate stockpiles were expected to have dropped last week.
Seven analysts estimated, on average, that crude inventories fell by 800,000 barrels in the week to September 20.
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