Oil Prices Struggle on Trade War Concerns, Production Increa


OilOil production rose in August, data from Reuters showed on Friday, as OPEC produced nearly 29.61 million barrels per day, up 80,000 barrels per day from July’s production level. The production increase came mostly from Nigeria and Iraq, who increased production by 60,000 barrels per day and 80,000 barrels per day respectively. Despite the increase in production, OPEC producers are still largely complying to their expected production cuts, with Saudi Arabia over-complying with the directive in order to keep prices tight. Also helping keep the market stable was a decrease in production from Iran whose production fell by 50,000 barrels per day in August, largely due to sanctions by the United States. August marks the first month in 2019 where OPEC’s production levels showed an increase. Meanwhile, in the U.S., energy companies cut drilling rigs for the ninth consecutive month, decreasing by 12 rigs for the week, and bringing the number of rigs to 742, the lowest number since the start of 2019. The total oil and gas rig count is now 904 rigs, 144 rigs lower than this time a year ago.

U.S. WTI futures were modestly higher on Monday afternoon in Asia after falling briefly in the morning as traders remained concerned about the simmering trade war between the United States and China and the impact that the new tariffs which were implemented yesterday would have on global oil demand. U.S. WTI futures gained 0.09 percent as of 2:25 p.m. HK/SIN, to trade at $55.11 per barrel. Brent crude futures slumped 0.31 percent to $58.28 per barrel. Oil prices eased nearly 4 percent last week and are expected to drop further as the trade war rages on and traders remain concerned that less trade will create less demand for oil.

Currency Market Movements

On the currency markets, the yen rallied against the U.S. dollar as traders sought out the safe-haven currency. The yen rose 0.11 percent against the dollar. The dollar was trading at 106.16 against the yen in the mid afternoon in Asia. The dollar also eased against the British pound, with the sterling gaining 0.07 percent to trade at $1.2164.

Gold prices also retained their safe-haven status, with gold futures gaining 0.24 percent to $1,533.00 per ounce on lingering trade war concerns.

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