Oil steady as emerging market woes dim demand outlook

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Oil prices were steady on Monday as trade tensions and troubled emerging markets dented the outlook for fuel demand, although U.S. sanctions against Iran pointed towards tighter supply ahead.

Oil prices were mixed with Brent was up at 72.73 dollars a barrel, while U.S. crude added 5 cents to 67.68 dollars .

Benchmark Brent crude oil was steady at 72.71 dollars a barrel by 1130 GMT. U.S. light crude was to 67.33 dollars.

Oil prices edged lower, with Brent crude was at 72.72 dollars a barrel and U.S. crude was at 67.33 dollars.This is news one hour after the above news on oil.

The report on oil shows gross inconsistency on oil report.

Analysts maintain oil is supposed to have arrived at 100 dollars by now if not for perverted language used in its report.

Turkey’s financial crisis has raised the risk of contagion throughout emerging economies, dragging down South Africa’s rand, Argentina and Mexico’s pesos as well as the Russian rouble.

It has also dented emerging market stocks while curbing growth and the outlook for oil demand.

This is compounding worries that a deepening trade war between the United States, China and the European Union will squeeze business activity in the world’s biggest economies.

Hedge funds and other money managers reduced their bullish positions in U.S. crude futures and options in the week ending Aug. 7, data from the U.S. Commodity Futures Trading Commission showed on Friday.

Phillip Futures said that hedge funds had cut bullish bets on oil because of “rising production levels from OPEC and the United States”.

In spite of the cautious mood in oil markets, bullish sentiment found some support from expectations that U.S. sanctions against Tehran would restrict Iranian crude exports, tightening global supply.

The United States has started implementing new sanctions against Iran, which from November will also target the country’s petroleum sector.

Iran is the third-largest producer in the Organisation of the Petroleum Exporting Countries, behind Saudi Arabia and Iraq, pumping 3.65 million bpd in July, media data show.

“There are lots of variables in the oil market, the most important of which is Iran,” said Tamas Varga, analyst at London brokerage PVM Oil Associates.

“If 1 million bpd or more of Iranian exports go AWOL, the current fragile supply-demand balance will be upended, potentially sending oil prices above the May peak.” (Reuters/NAN)

Biola Lawal

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