💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

UPDATE 9-Oil slumps on new worries about supply, Goldman caution

Published 09/03/2016, 04:49 am
© Reuters.  UPDATE 9-Oil slumps on new worries about supply, Goldman caution
GS
-
LCO
-
CL
-

* Oil rally pauses after 6 days of gains for Brent

* Commodity price rally unsustainable, Goldman says

* U.S. crude stockpiles seen hitting record highs again

* North Sea output seen hitting 4-year peak by April

* Kuwait pumps 3 mlb bpd, won't join output freeze without Iran (New throughout, updates prices, market activity and comments to U.S. session; changes byline and dateline, previous LONDON)

By Barani Krishnan

NEW YORK, March 8 (Reuters) - Oil prices fell about 3 percent on Tuesday, retreating after six days of gains for benchmark Brent crude, as Goldman Sachs (NYSE:GS) suggested the rally was unsustainable and analysts expected data likely to show another record high in U.S. stockpiles.

Differing views on a plan to limit oil output also put the market on the defensive. Kuwait, producing 3 million barrels per day (bpd), said it will freeze output only if all major producers participate, including Iran, which has balked at the plan. comments out of Kuwait have encouraged the sell-off and it appears likely that a focus on weekly oil inventories will encourage prices lower," said Matt Smith, director of commodity research at New York-based Clipper Data. Brent LOCc1 was down $1, or 2.5 percent, at $39.84 a barrel by 12:42 p.m. EST (1742 GMT). During the session it hit a 2016 high of $41.48, which was up more than 50 percent from a 12-year lows of $27.10 struck less than two months ago.

U.S. crude slipped $1.23, or 3.3 percent, to $36.67 a barrel, rallying earlier to a three-month high of $38.39.

Goldman Sachs said rising oil prices "simply are not sustainable in the current environment".

The energy market "needs lower prices" to keep U.S. shale producers from ramping up output, Goldman said in a report. Otherwise, "an oil price rally will prove self-defeating, as it did last spring."

A Reuters poll of oil analysts forecast that U.S. crude stocks likely rose 3.6 million barrels last week, pushing total inventories to a record high for a fourth week EIA/S .

The American Petroleum Institute will release more preliminary stockpiles data at 4:30 p.m. EST (2130 GMT), before official numbers on Wednesday from the U.S. government's Energy Information Administration (EIA).

A global supply glut in oil has brought prices down from highs above $100 in mid-2014.

North Sea crude supply should hit a four-year peak in April, holding above 2 million bpd for an eighth consecutive month, monthly loading programmes show. a development that could support a further rally, the EIA said it expected U.S. production for this year to drop 760,000 bpd versus 740,000 bpd previously. It also cut its 2016 demand growth forecast by 80,000 bpd versus 110,000 barrels previously. China's crude imports jumped 19 percent between January and February to 31.80 million tonnes, Brent's rally to $40 could slow oil purchases in the second quarter, trade sources said. China's economic health also remained in question, with total exports falling 25 percent in February.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.