Crude oil futures were lower during mid-morning trade in Asia Monday as markets began to recover from Tropical Storm Barry, while a bearish outlook on oil fundamentals by the International Energy Agency also pushed prices lower. At 10:40 am Singapore time (0240 GMT), front-month ICE Brent September futures fell 24 cents/b (0.36%) from Friday’s settle at $66.48/b, while the NYMEX August light sweet crude futures contract was 31 cents/b (0.51%) lower at $59.90/b.
Hurricane Barry weakened to a tropical depression as it moved further inland Sunday. The Port of New Orleans, which had been shut since Friday, was partially reopened Sunday, with full cargo operations expected to resume Monday. “Barry is expected to produce rain accumulations of 6 to 12 inches over south-central Louisiana, with isolated maximum amounts of 15 inches,” the NHC said Sunday.
More oil and gas production in the Gulf of Mexico was reported offline Sunday, but operators are expected to start the process of evaluating the status of their offshore platforms with an eye toward resuming production. “Market did not give weightage to supply disruptions due to hurricane Barry despite it affected 70% of the production in the US Gulf of Mexico, according to BSEE [Bureau of Safety and Environmental Enforcement] survey,” said ANZ analysts in a note Monday.
Meanwhile, the IEA published its monthly oil market report on Friday in which it said that the extension of oil production cuts by OPEC and its partners has not changed the “fundamental outlook” of an oversupplied market.
“The International Energy Agency (IEA) also is bearish on oil and demand,” said Price Futures Group’s senior market analyst Phil Flynn.
In the first half of 2019, oil supply exceeded demand by 900,000 b/d, adding to “huge” stock builds in the second half of last year, the IEA noted. “Clearly, market tightness is not an issue for the time being and any rebalancing seems to have moved further into the future,” it said.
“The agency [IEA] sees that the current rate of OPEC cut will not be sufficient to clear the supply overhang in 2020, and they see the oversupplied market backdrop as likely to return next year. Investors continued to give more weightage to a deteriorating demand outlook,” said ANZ analysts. “Excluding Venezuela and Iran… OPEC’s market share has fallen from a recent peak of 36.7% in September 2016 to 34.5% currently,” it said.