Futures Movers: Oil extends slump, but remains on track for a monthly gain

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Oil futures slumped Monday, building on the previous week’s decline, which erased the spike that followed attacks on Saudi production facilities earlier in September.

Prices, however, remained on track to post a monthly gain.

West Texas Intermediate crude for November delivery CLX19, -1.68%  fell 78 cents, or 1.4%, at $55.13 a barrel on the New York Mercantile Exchange. November Brent crude BRNX19, -1.78%  declined 74 cents, or 1.2%, to $61.17 a barrel on ICE Futures Europe.

The front-month WTI is on track for a 0.4% monthly rise, though down more than 5% for the quarter. Brent’s November contract, which expires at the end of the session, is on track for a 2.8% monthly climb, but trades down 4.9% for the quarter.

“With the geopolitical bullishness that followed attacks on Saudi oil processing facilities quickly fading, the global crude complex appears to again be leaning in favor of the bears as broader economic fears top the market’s list of concerns,” said Robbie Fraser, senior commodity analyst at Schneider Electric.

Monday’s declines build on last week’s setback, which saw losses of nearly 4% for both benchmarks. Crude gave back all the gains — and then some — seen after the Sept. 14 attacks that knocked more than 5 million barrels a day of Saudi crude production offline. The Saudis last week said they had restored production capacity to 11 million barrels a day, marking a quicker than expected recovery, though analysts expressed some skepticism over the figures.

On Monday, Aramco Trading’s Chief Executive Officer Ibrahim al-Buainain said that state-owned Saudi Aramco has restored all oil capacity to pre-attack levels, according to a news report from The Wall Street Journal. The report also said that Saudi oil officials and advisers had said last week that Aramco’s production had returned to 9.8 million barrels a day, which is about the same level it was at before the attacks.

Attention Monday turned mostly to the outlook for energy demand. “Concerns surrounding slowing global oil and fuel demands due to disappointing economic data out of Europe and China continued to weigh on the markets,” wrote analysts at TFS Energy, in a note. “Additional selling pressure in the markets appeared to have resulted from last week’s declaration by Saudi Arabia of a partial cease-fire in Yemen, including area’s controlled by Iranian backed Houthi rebels.”

Downside may be limited, however, by “expectations of tightened supplies from producer output cuts and reduced Venezuelan and Iranian exports, uncertainty surrounding the resumption of U.S.-China trade talks, and fears of a Persian Gulf supply disruption will likely provide support for oil prices in the coming weeks,” they wrote.

October gasoline RBV19, -1.97%  fell 1.5% to $1.6273 a gallon, while October heating oil HOV19, -1.41%  was off 0.9% at $1.924 a gallon. Both front-month contracts, which expire at the day’s settlements, are up for the month, but down for the quarter.

November natural-gas futures NGX19, -2.70%  declined 2.4% to $2.347 per million British thermal units, trading up about 1% for the month, and looking to lose more than 2% for the third quarter.