Oil prices fell slightly on Wednesday as the US stock markets continued to struggle due to concerns about a weakening global economy. Anadarko photo.
Oil prices down under 1 per cent
Oil prices slipped during early trading on Wednesday, following US stock markets, but regained some ground later in the day on signs that US shale growth is slowing and major Asian economies will be implementing fiscal stimulus plans to boost growth.
By 4:19 p.m., EST, benchmark Brent crude futures had fallen 39 cents to $61.11 and US West Texas Intermediate futures were down 41 cents to $52.60/barrel.
Prices had fallen earlier in the day on investors’ concerns about a global economic slowdown. Weak economic data from South Korea and China along with the International Monetary Fund cutting its global growth forecast to 3.5 per cent from 3.7 per cent sparked investors’ doubt.
Buoying oil prices was the EIA’s monthly Drilling Productivity Report which forecasts that US shale regions will boost their combined oil output by 62,000 barrels per day (b/d) in February over this month.
Should this bear out, it would be the slowest growth, month on month, in the major shale plays since May 2018, Warren Patterson, Head of Commodities Strategy at ING told OilPrice.com.
At the World Economic Forum in Davos, Switzerland, the heads of Occidental Petroleum and Hess Corp., sat on the same panel as OPEC Secretary-General Mohammed Barkindo.
During the event, Occidental Chief Executive Vicki Hollub said “I believe not as much money will be pouring into the Permian basin this time. I believe investors will hold companies accountable for returns and a lot of this didn’t happen previously”.
Hess Corp founder and Chief Executive, John Hess said shale production now accounts for about 6 per cent of global production. “It will probably go up 10 per cent by mid-decade, but then it flattens out”.
“Shale is not the next Saudi Arabia. It is an important short-cycle component,” said Hess.
Signals from Japan and China that they would use practices to boost economic growth also underpinned oil prices on Wednesday. This gave hope to oil market investors and eased concerns about slowing global economic growth and lower crude demand.
The American Petroleum Institute will release its crude inventory report on Wednesday afternoon, while the US Energy Information Administration will offer its data on US crude stocks on Thursday.
Last week, the EIA reported a decline in US crude stockpiles by 2.7 million barrels. However, during the same period, gasoline inventories rose by 7.5 million barrels.