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Oil Prices Extend Loss As Production Returns At Gulf Of Mexico

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Oil prices extended loss for a second day yesterday as more production facilities returned to operation in the U.S. Gulf after Hurricane Barry swept through recently, while Chinese economic data subdued the outlook for crude demand.

Brent crude futures were down 10 cents, or 0.2 per cent at $66.38 a barrel after falling 0.4 per cent overnight, while the U.S. crude fell by 10 cents, or 0.2 per cent to $59.48 a barrel. The U.S. benchmark fell about 1 per cent in the previous session.

Both contracts last week made their biggest weekly gains in three weeks as U.S. oil inventories fell and diplomatic tensions rose in the Middle East.

But as producers on Monday began restoring some of the nearly 74 per cent of output that was shut at U.S. Gulf of Mexico platforms ahead of Hurricane Barry, concerns about oversupply returned to the fore.

While Chinese data on Monday showed industrial output and retail data beat expectations, overall figures showed the country’s slowest quarterly economic growth in decades.

China’s oil throughput rose to a record 13.07 million barrels per day in June, up 7.7 per cent from a year earlier, following the start-up of two new large refineries, official data showed.

Still, economic growth of just 6.2 per cent in the second quarter of 2019 – the weakest in 27 years – highlighted the impact of trade tensions with Washington and raised the possibility that more incentives might be needed to jump-start the economy.

“The more significant drag on oil markets is China’s weaker consumption data,” said Stephen Innes, managing partner, at Vanguard Markets.

In the U.S. there was 1.3 million barrels per day (bpd) of oil production offline in the U.S.-regulated areas of the Gulf of Mexico on Monday, about 80,000 barrels fewer than on Sunday.

Workers also were returning to the more than 280 production platforms that had been evacuated. It can take several days for full production to be resumed after a storm leaves the Gulf of Mexico.

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