Economy

Oil Steadies As Investors Weigh Recession Risk Against Saudi Assurance

Oil Steadies As Investors Weigh Recession Risk Against Saudi Assurance

Energy shares were the worst performing sector tumbling along with Crude oil which sold off 3.4%, after a larger than expected inventory build reported by the Energy Information Administration (EIA).

U.S. West Texas Intermediate crude was down 50 cents at $52.98 a barrel.

EIA says crude oil inventories in the USA rose by 6.8 million barrels.

Oil prices edged higher on Monday after reassurances from top oil exporter Saudi Arabia offered some respite from last week's heavy losses as deepening U.S. trade wars fanned fears of a global economic slowdown.

Meanwhile, Saudi Energy Minister Khalid al-Falih has called recent volatility "unwarranted" and has said he expects OPEC to help to stabilize prices beyond the end global output pact that ends at the start of July.

(Graphic: U.S. crude inventories, weekly changes since 2017 png link: tmsnrt.rs/2XlX17b).

That estimation surpassed an earlier reading from the American Petroleum Institute that showed stockpiles rising by 3.5 million barrels in the week.

Front-month Brent crude futures were at $62.48 at 1026 GMT, up $0.49, or 0.79%, above Friday's close. In May, prices started to cool as global trade tensions began to mount with increased sabre-rattling between the USA and China and an unexpected move by Washington to impose tariffs on Mexican goods.

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Oil prices fell on Tuesday amid a global economic slowdown that is starting to hit oil demand, triggering calls in producer club OPEC for supply cuts to be extended.

With output cuts in place, emerging consensus within the Organization of the Petroleum Exporting Countries and its allies to extend a cap on production, and geopolitical worries, prices are seen rising nearly 10% in the near term.

With U.S. production surging, more of its oil is being exported, with a record of six super-tankers scheduled for loading at the Louisiana Offshore Oil Port (LOOP) between late May and early June.

Rising oil production and piling inventories in the United States have also been a thorn in the flesh for prices.

There were glimmers of hope that the US might ease its no-waivers stance on Iran when US President Donald Trump said a nuclear deal with Tehran was "a possibility".

The kingdom boosted production last month by the most this year as output from fellow OPEC member Iran plunged to the lowest since 1990 due to USA sanctions, according to a Bloomberg survey of officials, analysts and ship-tracking data.

A planned June 4 strike by Norwegian workers could also lead to tighter global supply and buttress prices, potentially cutting Norway's oil and gas output by about 440,000 barrels of oil equivalents per day if mediation efforts fail.