Oil rises on supply cuts, but weak economy holds market back

Oil rises on supply cuts, but weak economy holds market back

Oil has tumbled from a 2019 peak above $75 a barrel in April to $61 a barrel now on concerns about weakening demand due to a U.S.

"The revisions imply a 300,000 barrel per day reduction in our current global oil demand outlook of 1.3 million barrels per day year-on-year for this year", the British bank said.

OPEC is now scheduled to meet in Vienna on June 25 to decide output policy for the rest of the year.

OPEC, Russia, and several other producers began to reduce supply in January 2017 in an attempt to erase a glut.

Trade tensions between the United States and China, the world's two biggest oil consumers, also weighed on prices.

The plunge in oil to below $50 per barrel - and sometimes even below $30 - from as high as $115 in mid-2014 has helped reduce growth in U.S. shale output.

U.S. President Donald Trump on Wednesday said he had a feeling that a trade deal could be reached, while again threatening to increase tariffs on Chinese goods if they do not make a deal.

From his subsequent meetings with Russian Energy Minister Alexander Novak, Al-Falih has drawn the conclusion that "the oil market will need continued supply oversight, while making sure that we continue to guide the market towards stability".

The Organisation of the Petroleum Exporting Countries (OPEC) and some non-affiliated producers including Russian Federation, known collectively as OPEC+, have withheld supplies since the start of the year to prop up prices. There is a debate obviously within the country about the exact volume that Russian Federation should be producing in the second half."The coalition has yet to decide when it will meet to address the supply accord". And we with Novak will look at the global market and discuss it when we meet in three weeks, the Saudi minister said.

The EIA on Tuesday cut its forecasts for 2019 world oil demand growth, which also pressured oil futures.

"The market has seen pressure over the last couple of weeks due to the significant rise in crude and product inventories here in the US that has pressured prices as the market now awaits the outcome of the upcoming OPEC and non-OPEC producers' meeting", said Andrew Lipow of Lipow Oil Associates in Houston.

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