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Oil prices have risen steadily over the last few weeks, pushed up by the decline in US stocks and information on the initial public offering of the Saudi oil company. But a broader down trend has settled this week and could persist.
Brent, the international benchmark, fell 0.3% to $ 60.34 in Friday morning's session. West Texas Intermediate futures fell 0.2% to $ 55.02, while
S & P 500
was up 0.2%.
Friday's oil weakness was built on a series of three consecutive losses. WTI was down 4.8% from Tuesday to Thursday and Brent 3.5%.
Oil began September with a relatively strong form. Some oil stocks, such as
Exxon Mobil
(ticker: XOM), outperformed the broader market.
Some bullish factors have been at play. Saudi Arabia could list the shares of Aramco, the state – run oil company, as early as next year. Market watchers expect the country to do everything in its power to support oil prices before the event.
The new Saudi energy minister, Prince Abdulaziz bin Salman, managed this week to bring Iraq and Nigeria, who were violating an OPEC agreement on cutting production, to cut production. Platts editor Herman Wang described the move as "not in the right direction for the coalition's efforts to keep crude prices down."
But Saudi Arabia can not do much at this stage. In June, the United States surpassed Saudi Arabia and Russia as the world's largest oil exporter, according to the International Energy Agency. The United States could also be willing to enter into an agreement with Iran to allow it to export oil after Hawk advisor John Bolton was kicked out of the White House.
OPEC's own researchers predict a drop in demand. Expectations that supply will far outstrip demand in 2020 remain the main driver of oil prices.
"Although the incessant stocks we have seen since early 2018 have stopped, this is temporary," AIE wrote Thursday. "Soon, OPEC producers will again see an increase in oil production off OPEC, with the implicit market equilibrium returning to a large surplus and putting pressure on prices. The challenge of managing the market remains a major challenge well before 2020. "
Write to Avi Salzman at [email protected]
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