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Oil Prices Set for Weekly Decline as Weak Demand Forecasts Dominate Tanker Attacks

© Reuters.
© Reuters.

Investing.com – Oil prices struggled for direction on Friday, but headed for a weekly decline as fresh signs of expectations for weak demand and a forecast for strong supply growth next year more than offset the tension caused by suspected attacks on tankers off the coast of Iran.

New York-traded fell 19 cents, or 0.4%, to $52.09 a barrel by 8:15 AM ET (12:15 GMT), while , the benchmark for oil prices outside the U.S. edged forward 7 cents, or 0.1%, to $61.38.

The two blends were headed for a weekly decline of 3.4% and 2.9%, respectively.

due to worsening prospects for world trade, the International Energy Agency (IEA) said on Friday in its .

Although the IEA said that economic stimulus packages should support demand, it noted that “the worsening trade outlook (is) a common theme across all regions.”

According to the IEA, U.S. sanctions on Iran and Venezuela, the OPEC-led output cut agreement, fighting in Libya and attacks on tankers in the Gulf of Oman added only y limited uncertainty to supply. It noted that outside of OPEC, global supply will grow by an estimated 2.3 million barrels a day next year, well ahead of a 1.4 million barrel a day rise in global demand.

Simon Derrick, strategist at BNY Mellon, said the 4% spike in oil on the back of the tanker attacks in the Gulf of Oman on Thursday “weren’t particularly dramatic when compared to others seen this year,” and added that it was telling that oil-related currencies barely budged on the news.

“My New York-based colleague John Velis has pointed out that the NY Fed’s regular Oil Price Dynamics Report helped highlight that while oversupply had been the key dynamic for oil prices, they were seeing demand factors starting to weaken as well,” Derrick wrote in a note released Friday.

“In other words, oil prices are beginning to react to the possibility of a global slowdown (much as they did in the summer of 2008),” Derrick said.

In other energy trading, rose 0.3% at $1.7255 a gallon by 8:17 AM ET (12:17 GMT), while traded up 0.4% at $1.81834 a gallon.

Lastly, gained 1.0% at $2.348 per million British thermal unit.

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Source: Investing.com