Oil futures finish lower as traders assess cut to demand outlook

 

As the International Energy Agency applied a deeper cut to its forecast for global crude demand this year, oil futures finished lower. The drop was also felt by Oklahoma-related energy companies and came as two Arab nations eased the risks to supply from the region.

West Texas Intermediate crude for September delivery lost 43 cents or 1% to settle at $42.24 a barrel in trading on the New York Mercantile Exchange. Global benchmark October Brent crude fell 47 cents or 1% to finish the day at $44.96 a barrel in trading on the ICE Futures Europe.

However, a third week of declines in U.S. crude supplies and signs of a recent uptick in consumption helped to limit price losses reported MarketWatch.

The IEA, in its monthly oil market report released Thursday, deepened its forecast for a contraction in global demand for 2020. The agency expects global demand to contract by 8.1 million barrels a day year on year, 140,000 barrels more than in last month’s report. It’s 2020 oil demand forecast now stands at 91.9 million barrels a day.

But analysts said the report might have only a fleeting impact, with prices underpinned by a continued fall in U.S. crude inventories reported by the Energy Information Administration on Wednesday. The EIA reported a decline of 4.5 million barrels in last week’s crude stockpiles, marking a third straight weekly drop.

Phil Flynn, senior market analyst at The Price Futures Group, said the data underlined signs of improving domestic demand and the potential for a tightening of supplies globally, noting that the IEA report said global demand exceeded supply in June, implying a drawdown in global stocks over the remainder of the year.

“So barring any major setbacks due to a second wave [COVID-19] shutdown or a major stock market meltdown, the prospects for a year-end run-up in oil prices is looking extremely likely,” Flynn said in a daily note.

The IEA report, however, also said “ongoing uncertainty around demand caused by Covid-19 and the possibility of higher output means that the oil market’s re-balancing remains delicate.”

Cailin Birch, global economist at The Economist Intelligence Unit, said the “initial rebound in oil consumption that was seen in June, and to a lesser extent, July, is likely to plateau in August,” as there isn’t likely to be a sustained recovery in travel, and jet fuel, demand until a vaccine is available, most likely in late 2021.

“Meanwhile, demand for other fuel sources will fluctuate in line with the coronavirus case load; when case numbers rise…this will depress demand for gasoline and other energy products, and economic activity dips,” she said in emailed commentary. “Overall, the coronavirus threat will continue to keep a lid on energy demand and prices, and it isn’t likely to dissipate until 2021.”

As oil dipped, so did some of the Oklahoma-related energy companies. It proved to be a down day for many oil and gas stocks.

SandRidge Energy fell 4 cents or 2.35% to settle at $1.66 per share. Devon Energy dropped 66 cents for a 5.32% slide to $11.84.

Mammoth Energy Services was unchanged at $1.61. NGL Energy Partners LP saw a 17-cent or 3.73% decline to $4.39.

Continental Resources Inc. dropped 32 cents or 1.71% to settle at $18.35. Ascent Resources Plc was down 5.26% or 12 cents to finish the day at $2.25. Panhandle Oil and Gas Inc. was down 2 cents for a 0.85% decline to $2.32 per share.

WPX Energy dropped 4.06% or 27 cents to $6.38. Blueknight Energy Partners had a 7 cent or 4.38% decline to $1.53.

Also in the declining column was Ovintiv. It experienced a 23 cent drop or 1.47% to $15.40 per share.  Williams Companies had a 0.19% or 4 cent drop to $21.57.

ConocoPhillips (COP) down 1.03 at 40.63 – change 2.48%

Diamondback Energy (FANG) up 0.01 at 44.58 – change 0.02%

Energy Transfer LP (ET) unchanged at 6.55 – change 0.00%

EOG Resources (EOG) down 1.67 at 47.42 – change 3.41%

ExxonMobil (XOM) down 1.08 at 43.01 – change 2.45%

Kinder Morgan (KMI) down 0.22 at 14.27 – change 1.52%

Marathon Oil Corp. (MRO) down 0.09 at 5.89 – change 1.51%

National Oilwell Varco (NOV) down 0.17 at 13.03 – change 1.22%

Noble Energy (NBL) down 0.15 at 10.57 – change 1.40%

Occidental Petroleum (OXY) down 0.32 at 14.60 – change 2.15%

ONEOK (OKE) down 1.13 at 28.81 – change 3.78%

Phillips 66 (PSX) down 1.78 at 62.63 – change 2.77%

Pioneer Natural Resources (PXD) down 0.57 at 109.94 – change 0.51%

Valero (VLO) down 1.93 at 53.19 – change 3.51%
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CLOSING TOP UTILITY STOCKS

American Electric Power (AEP) down 0.49 at 83.66 – change 0.59%

 Source: MarketWatch