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Oil falls over 2% on weaker demand growth, gain in U.S. crude stocks

Credit: Reuters Studio
Published on June 12, 2019 - Duration: 01:50s

Oil falls over 2% on weaker demand growth, gain in U.S. crude stocks

Oil prices fell more than 2% on Wednesday, weighed down by a weaker demand outlook and a rise in U.S. crude inventories despite expectations of extended supply cuts led by OPEC.

David Pollard reports.

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Oil falls over 2% on weaker demand growth, gain in U.S. crude stocks

Traders in black gold were on red alert on Wednesday .... As crude prices slumped close to three per cent.

US inventories are swelling stocks: last week they were up by nearly five million barrels.

But trade tensions between US and China are also playing their part ... Putting markets on watch not just for supply shocks - but dwindling demand as economies slow.

For its part, OPEC could prop up prices by extending a 1.2 million barrels per day production cut in force since the start of the year ... Agreement, 'close' according to the United Arab Emirates' energy minister on Tuesday.

The cartel plus Russia are due to decide later this month - though Russia wants a later date.

WTI futures, meanwhile, were down over a dollar fifty to under 52 dollars a barrel.

Benchmark Brent lost just shy of a dollar 70 to go to 60 dollars 60.

Last week, Saudi Arabia's energy minister warned anything below 60 dollars could stop oil firms investing in the industry.

This week, his Russian counterpart warned - if the oil deal wasn't extended - he couldn't rule out prices at below 30 dollars a barrel.

(SOUNDBITE) (Russian) RUSSIAN ENERGY MINISTER, ALEXANDER NOVAK, SAYING: "Such a scenario is not out of the question.

Lots of things depend on the market this year, on supply and demand.

It also depends on the uncertainties, trade wars, the pressure from the sanctions several countries are facing.

It is on the radar." From a 45 per cent price rally in the first part of the year, prices are down more than 15 per cent since April.

And the economic jitters have analysts downgrading their oil output growth forecasts.

Barclays, consultancy FGE and others revising that down from around 1.3 to one million barrels per day.

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