Oil Futures Settle Little Changed

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Intercontinental Exchange Brent crude settled shallowly mixed after trading in narrow ranges for most of the session. Market sentiment continues to be dominated by concerns over a weakening global economic outlook and slowing oil demand amid subdued economic data and escalating trade tensions.

NYMEX September West Texas Intermediate futures posted most of the gains in the market-on-close trading, up $0.43 at $54.93 per barrel (bbl) settlement, finding some support from a weaker U.S. dollar. The greenback fell to 97.215 late afternoon, a fresh two-week low. Following back-and-forth uneven trade for most of the session, ICE October Brent contract settled up 4 cents at $58.57 bbl.

NYMEX September ULSD futures settled 0.22 cent down at $1.8058 gallon and the September RBOB contract settled 0.88 cent lower at $1.6652 gallon.

Oil futures moved between gains and losses Monday afternoon as market participants weigh trade-related issues around global economic growth and weakening demand. Markets remain on edge for a potential escalations in global trade tensions following the latest flare-up in the US-China standoff. U.S. President Donald Trump on Friday, Aug. 9, raised the possibility that September's meeting with the Chinese trade delegation might be cancelled, dashing hopes for a possible resolution in a year-long trade dispute.

"The U.S.-China trade fight has created a certain sentiment in the market, but the part that really matters within that sentiment for the oil business is demand has fallen a lot since the beginning of the year. Much lower than we expected," said Fereidun Fesharaki, founder and chairman of FGE Consulting Group during an interview with Bloomberg TV.

Meanwhile, market participants continue to weigh last week's downward revisions to global oil demand estimates for this year and next from the International Energy Agency and US Energy Information Administration. IEA said the 'outlook is fragile' and that there's 'greater likelihood of further downward revisions than an upward one" in the coming months.

The Paris-based energy watchdog lowered its demand growth estimate for both years by 100,000 barrels per day (bpd), projecting expansion of 1.1 million bpd in 2019 and 1.3 million bpd in 2020. In the first half 2019, the agency said demand grew by only 600,000 bpd, with 500,000 bpd of that growth from China, while fuel consumption in the OECD countries continued to lag behind. As the Chinese economy slows even further, it is likely to drag global demand lower along with it. IEA also said that world oil consumption in the first half of the year was the weakest in decade.

Looking ahead, this week will be busy on economic data from Eurozone and the U.S. On Wednesday, Aug. 14, second-quarter European GDP is set for release, while figures on U.S. industrial output will be published on Thursday, Aug. 15. The week will end with a fresh reading of consumer sentiment index from the University of Michigan, with markets calling for a slight deterioration, with August reading expected at 97.5 versus 98.4 last month.

Liubov Georges can be reached at liubov.georges@dtn.com

(BAS)