Oil rises as supply risks outweigh demand woes

Bloomberg

Oil finished higher for the week after a volatile trading session that pitted gnawing doubts about global demand against supply threats from the Middle East and beyond.
Futures gained 0.3 percent in New York and ended the week up 1 percent, reversing from last week’s steep loss. Oil turned higher after Mexico’s state-run oil company said crude output fell about 10 percent in the second quarter, adding to tensions after Iran reportedly tested a medium-range ballistic missile in the Persia Gulf region.
“The market is leaning into the upside, probably pricing in a little more geopolitical risk premium,” said Phil Flynn, a senior markets analyst at Price Futures Group Inc. “People are going to be hesitant to be short over the weekend with all the Middle East tensions.”
But crude remains down almost 4 percent for the month amid fears about sluggish demand growth. The US Commerce Department said gross domestic product expanded by an annualised 2.1 percent in the second quarter as trade disputes sapped exports and business investment. Growth was down from the first quarter although still better than forecast.
“The headline number loo-ks OK but the underlying statistics reflect the weakness,” said Cailin Birch, a global economist at the Economist Intelligence Unit in London.