WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange oil futures nearest to delivery and Intercontinental Exchange Brent pulled back Monday afternoon, with the West Texas Intermediate contract accelerating losses in market-on-close trade as data showed offshore oil production in the Gulf of Mexico began post-storm recovery.
NYMEX August WTI settled $0.63 lower at $59.58 barrel (bbl), while ICE September Brent crude settled $0.24 down at $66.48 after trading in narrow ranges for most of the Monday's session. NYMEX August RBOB futures plunged 4.67cts or 2.53% to settle at a one-week low at $1.9303 gallon and August ULSD futures were down 2.85cts to $1.9516 gallon settlement.
Oil futures settled lower on Monday following reports that Hurricane Barry caused no major damage to oil output or infrastructure and Gulf Coast operators have begun returning workers to offshore platforms.
The Bureau of Safety and Environmental Enforcement said operator reports estimate approximately 69% of production in the Gulf of Mexico remains shut-in Monday, down from 73% reported Sunday afternoon. According to wire services, most of the refineries in Louisiana continued to operate this weekend, as Barry was downgraded from a Category 1 hurricane before coming onshore. Louisiana energy provider Entergy reported power outages hit roughly 67,000 customers by Sunday afternoon, with many of the outages in less populated areas.
Elsewhere, market participants returned their focus to decelerating growth in China, which contracted 0.2% in the second quarter from 6.4% in January-March, according to Chinese government statistics. The latest figures show the slowest growth China experienced in nearly 30 years, pointing to a heavy toll of a trade war with the United States.
Wall Street Journal reported U.S. manufacturers began to shift production out of China in recent months in order to avoid U.S. tariffs. According to Census Bureau, U.S. imports from China fell 12% since the start of the year -- the lowest level since the financial crisis a decade ago. Market analysts believe the move by U.S. companies will result in a reordering of global manufacturing supply chain out of China, which could contribute to prolong period of uneven trade flows and volatility in global economy.
The International Energy Agency late last week said it expects an oversupplied market next year, as global demand will lag supply by 0.9 million barrels per day (bpd) in 2019, also resulting in a sizable inventory build-up.
"This surplus adds to the huge stock build seen in the second half of 2018 when oil production surged just as demand growth started to falter," the Paris-based IEA said on Friday. Despite ongoing 1.2 million bpd supply cuts, re-balancing of the market is "still some way off" added IEA.
Liubov Georges can be reached at email@example.com
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