Oil prices climb as supply shortage worries outweigh demand worries – Reuters

Oil pump cylinders are seen at the Vaca Muerta shale oil and gas field in the Patagonian province of Neuquen, Argentina January 21, 2019. REUTERS/Agustin Marcarian/File Photo

SINGAPORE, Aug 5 (Reuters) – Oil prices rose on Friday, rebounding to their lowest levels since February in the previous session as fears of a supply shortage were enough to quash fears of a slowdown in the fuel request.

Brent crude rose 55 cents, or 0.6%, to $94.67 a barrel at 0630 GMT, while U.S. West Texas Intermediate crude rose 65 cents, or 0.8%, to 89.19 dollars per barrel.

Oil prices came under pressure this week as the market worried about the impact of inflation on economic growth and demand, but signs of tighter supply kept prices bottoming.

“OPEC’s small increase in supply highlights the market’s limited ability to handle further shortages,” analysts at ANZ Research said.

For September, OPEC+ is expected to raise its oil production target by 100,000 barrels per day. The rise is one of the smallest since OPEC quotas were introduced in 1982, according to OPEC data. Read more

Global crude oil markets remained firmly in reverse, where rapid prices are higher than in the months ahead, indicating tight supplies.

Supply problems are expected to increase as winter approaches, with European Union sanctions banning maritime imports of Russian crude and petroleum products due to come into effect on December 5.

“With the EU halting Russian imports by sea, the key question is whether Middle Eastern producers will re-route their barrels to Europe to fill the void,” RBC analyst Michael Tran said. .

“How this Russian policy of oil sanctions plays out will be one of the most important issues to watch for the rest of the year,” Tran added.

So far, signs of an economic slowdown have limited price recovery. Recession concerns intensified following the Bank of England’s warning of a prolonged downturn after raising interest rates to the highest since 1995. Read more

“If commodities aren’t priced in a looming economic downturn, they could be bracing for an era of ‘stagflation’ when the unemployment rate starts to rise and inflation stays elevated,” said Tina Teng, an analyst at CMC Markets.

Investors are focusing on the US jobs report to be released later today, which is expected to show nonfarm payrolls rose by 250,000 jobs last month, after increasing by 372,000 jobs in June. Read more

Any sign of strength in the labor market could fuel fears of aggressive action by the US Federal Reserve to curb inflation.

Reporting by Jeslyn Lerh and Florence Tan; Editing by Himani Sarkar and Kenneth Maxwell

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