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IAP ICAP

469.70
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
ICAP LSE:IAP London Ordinary Share GB0033872168 ORD 10P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 469.70 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Oil Prices Show Little Response to Lower Output Forecasts

09/09/2015 7:24pm

Dow Jones News


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By Timothy Puko 

Government forecasters Wednesday said U.S. oil production fell to a nearly one-year low and that low crude prices are likely to keep U.S. production declining through 2016.

The U.S. Energy Information Administration, in its monthly short-term energy outlook, said that production fell by 140,000 barrels a day in August from the prior month. Output averaged 9.6 million barrels a day at its peak in April, the highest level since 1971, and has steadily declined since then to 9.1 million, the lowest since September.

Prices showed little response to the data. Several recent big swings came largely from speculation about how producers and consumers will respond to prices that have fallen by more than half since last year. Now trading is calm until more tangible proof comes to show who was right, said Scott Shelton, broker at ICAP PLC.

"The market wants to see the actual weekly data (on inventory) instead of what the EIA forecasts," he said.

Light, sweet crude for October delivery recently traded down $1.02, or 2.2%, to $44.92 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, lost $1.15, or 2.3%, to $48.37 a barrel on ICE Futures Europe.

Traders have been fixated on China in recent months as worries about an economic slowdown in the world's second-biggest economy spilled over into crude and other commodities.

Markets got a boost early Wednesday after China's Ministry of Finance said that it would roll out a "more forceful" fiscal policy to stimulate economic growth, such as allocating more funds for infrastructure projects and tax cuts for small businesses.

But after rising by more than 1%, prices spent most of the day in retreat. Many are worried about an unrelenting supply from around the globe. With the Organization of the Petroleum Exporting Countries producing above its target of 30 million barrels a day, investors say U.S. production needs to fall to make the market less oversupplied.

The EIA has pushed back its expectations for a U.S. production recovery by about six months, saying monthly output will keep falling until it hits 8.6 million barrels a day until August 2016. It lowered its output expectations for both 2015 and 2016 by about 1.5%, to 9.2 million barrels a day this year and 8.8 million barrels a day next year.

The EIA estimates that cuts in production from the U.S. and many other countries are going to be completely canceled out by production increases from OPEC. It left global supply virtually unchanged at 96.5 million barrels a day this year and 97.3 million next year.

Saudi Arabia's crude oil output did slip in August by around 100,000 barrels a day to 10.26 million, an industry official said Wednesday. That is still close to the record level of 10.3 million barrels a day it hit in July. The amount of crude oil the country sent to export and domestic markets also fell by around 80,000 barrels a day from July, according to the official.

"Any lasting price recovery would require signs that the oversupply is being reduced," analysts at Commerzbank said in a report.

The EIA also cut its price forecast for both U.S. and global crude benchmarks through next year. The agency said U.S. crude would average $53.57 a barrel in 2016, down 1.6% from its previous forecast. The U.S. price averaged $93.17 a barrel in 2014.

Brent will average $58.57 a barrel in 2016, EIA said, trimming 1.4% from the previous forecast. In 2014 Brent averaged $98.89 a barrel.

Investors are also bracing for the latest U.S. oil stockpile numbers due later Wednesday from the American Petroleum Institute, an industry group, and on Thursday from the U.S. Energy Department. After last week's big builds in crude oil stocks, the consensus this week is for a smaller increase, and more volatility should be expected around the reports, analysts said.

Gasoline futures recently fell 1.5% to $1.3815 a gallon. Diesel futures fell 2.2% to $1.5587 a gallon.

Georgi Kantchev and Summer Said contributed to this article

Write to Timothy Puko at tim.puko@wsj.com

 

(END) Dow Jones Newswires

September 09, 2015 14:09 ET (18:09 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.

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