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|07 February, 2019

Thursday outlook: Oil prices drop on record level production in the U.S.

Oil prices drop as data from the EIA showed an increase in U.S. crude inventories. Asian shares remained unchanged as investors await hints on the Chinese-U.S trade front. More commentary on Middle East markets, currencies and precious metals

Image used for illustrative purpose. The BP West Coast Products LLC Carson oil refinery on August 7, 2006 in Carson, California.

Image used for illustrative purpose. The BP West Coast Products LLC Carson oil refinery on August 7, 2006 in Carson, California.

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  • Oil prices retreat on higher U.S. crude inventories
  • Asian shares remained unchanged, Wall Street edged lower
  • Dubai’s index rose, pushed by a 2 percent surge in Emirates NBD’s shares
  • Dollar rises, gold drops

Oil prices

Oil prices dropped on Thursday as data from the Energy Information Administration (EIA) showed on Wednesday that United States crude oil inventories climbed by 1.3 million barrels in the week that ended February 1 to 447.21 million barrels.

U.S. West Texas Intermediate (WTI) crude futures were at $53.84 per barrel at 0247 GMT, down 17 cents, or 0.3 percent, from their last settlement.

International Brent crude oil futures were down by 26 cents, or 0.4 percent, at $62.43 per barrel.

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Meanwhile, U.S. sanctions against Venezuela’s oil industry are expected to freeze the sales proceeds of 500,000 bpd of crude exports.

“We expect the oil price to rise in the first-half of 2019 on tightening supply conditions and decline in the second-half on weakening economic activity and an increase in U.S. crude exports to international markets,” said French bank BNP Paribas, according to a Reuters report.

Global markets

Asian shares were mainly unchanged on Thursday as market participants are still waiting on developments on the Chinese-U.S. trade front.

MSCI’s broadest index of Asia-Pacific shares outside Japan was little moved in early trade after ending almost unchanged on Wednesday.

Overnight on Wall Street, the Dow fell 0.08 percent, while the S&P 500 lost 0.22 percent and the Nasdaq 0.36 percent.

Middle East markets

Dubai’s index was up 0.6 percent on Wednesday helped by a 2 percent rise in Emirates NBD. Dubai's largest bank has called for a shareholders' meeting on Feb. 20 to discuss the issuance of multi-billion dirham non-convertible securities.

The Abu Dhabi index edged up 0.1 percent with Emirates Telecommunications Group adding 0.5 percent, and Abu Dhabi National Hotels surging 5.8 percent.

Saudi Arabia's index inched up 0.1 percent with bank Samba Financial Group rising 2 percent and petrochemical maker Saudi Basic Industries gaining 0.8 percent.

Qatar's index was down 0.3 percent as Ooredoo fell 3.9 percent in active trade.

Kuwait’s premier market index edged 0.2 percent lower, Bahrain’s index added 0.4 percent, Oman’s index edged 0.2 percent lower and Egypt’s EGX30 rose 0.2 percent.

Currencies

The dollar rose early on Thursday.

The dollar index, which measures the greenback against a basket of six major currencies, was up 0.34 percent at 96.391.

Precious metals

Gold prices dropped on a stronger dollar.

Spot gold was steady at $1,306.81 per ounce at 0050 GMT. Prices fell 0.7 percent in the previous session in their biggest one-day drop since January 18.

U.S. gold futures were down 0.3 percent at $1,310.70.

(Reporting by Gerard Aoun; Editing by Mily Chakrabarty)

(gerard.aoun@refinitiv.com)


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