Oil dips as weak demand fears counter Opec pledge

Bloomberg

Oil slid to its worst loss in two weeks as mounting fears about the global economy undercut the latest plan from Opec and its allies to stabilise markets.
Futures dropped by as much as 4.3 percent in New York, the steepest intraday decline since June 12. Bank of England Governor Mark Carney warned of the dangers of rising protectionism around the globe, citing a “widespread slowdown” that may require a major policy response. That added to worries following weak manufacturing reports from the US, China and Europe.
The anxieties blotted out optimism despite the agreement by major oil exporters to extend production cuts for nine more months. Divisions remained over Saudi Arabia’s push to target even deeper reductions, with Russia expressing doubts at the end of a summit in Vienna.
“There are concerns that demand might slow to where it overpowers supply,” Bart Melek, head of commodity strategy at Toronto’s TD Securities, said in an interview. The “gloomy” data, especially from China, “is very much part and parcel of what we’re seeing.”
The West Texas Intermediate crude for August delivery slipped $2.14 to $56.94 a barrel on the New York Mercantile Exchange, obliterating a previous gain that followed announcement of the Opec+ extension.
Brent for September settlement declined $2.12 to $62.94 a barrel on the ICE Futures Europe Exchange. The global benchmark crude was at a $5.92 premium to WTI for the same month.
At the Vienna meeting, Saudi Arabia said it would keep its output below 10 million barrels a day, even lower than required under the so-called Opec+ deal.
Saudi Energy Minister Khalid Al-Falih said he was “enthusiastic” about the outlook for oil demand.
Russian Energy Minister Alexander Novak also said the group was ready to respond to any significant supply disruptions.