By Reuters SINGAPORE - Oil prices fell on Tuesday, offsetting narrow gains in the previous session, as sluggish demand forecasts countered expectations that major producers would prop up oil prices by limiting crude oil output. A view of an oil refinery off the coast of Singapore March 14, 2008.
(REUTERS / Vivek Prakash / MANILA BULLETIN) International benchmark Brent crude futures LCOc1 were down 48 cents or 0.8%, from the previous settlement, at $58.09 a barrel by 0643 GMT. US West Texas Intermediate (WTI) CLc1 futures were at $54.52 per barrel, down by 41 cents, or 0.8%, from the last close. “Although the outlook remains bleak, oil prices have remained anchored this week after a rapid response from Saudi Arabia, who is serious about stepping in to defend the oil price,” Stephen Innes, managing partner at VM Markets Pte Ltd said in a note. Saudi Arabia, the de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), said late last week it plans to keep its crude oil exports below 7 million barrels per day in August and September to help drain global oil inventories. Analysts expect the country to support prices ahead of its plans to float Saudi Aramco, in what could be the world’s largest initial public offering (IPO). Saudi Aramco was ready for its IPO, but the timing for the deal will be decided by its sole shareholder, the Saudi government, a senior executive said on Monday. Kuwait on Monday also reiterated its commitment to OPEC+ supply curbs after Oil Minister Khaled al-Fadhel said Kuwait had cut its own output by more than required by the accord. OPEC and its allies, known as OPEC+, have agreed to cut 1.2 million barrels per day (bpd) since Jan. 1. But booming US shale oil production continues to chip away at efforts to limit the global supply overhang, weighing on prices. US oil output from seven major shale formations is expected to rise by 85,000 barrels per day (bpd) in September, to a record 8.77 million bpd, the US Energy Information Administration forecast in a report. Gloomy forecasts for the global economy and oil demand growth have also dragged on oil prices as the trade dispute between the United States and China escalates. “The swift reaction from Saudi Arabia will likely stabilize oil prices, but the oil price probably won’t move much above $60 per barrel until there is evidence of progress in US-China trade negotiations,” said Innes. China’s central bank lowered its official yuan midpoint for the ninth straight day to a fresh 11-year low on Tuesday to reflect broad weakness in the local unit. A lower yuan raises the cost of dollar-denominated oil imports in China, the world’s biggest crude oil importer.