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Oil prices set for 2019’s biggest weekly loss

Oil prices set for 2019’s biggest weekly loss

Oil rose towards $69 a barrel today after two sessions of losses, but remained on track for its biggest weekly drop this year due to rising inventories and concerns about an economic slowdown.

US crude inventories rose to hit the highest since July 2017, suggesting ample supplies in the world’s top consumer.

Meanwhile, worries that the US-China trade is developing into a more entrenched dispute have also hit prices.

Brent crude, the global benchmark, rose 98 cents to $68.74 a barrel but remained on course for a decline of nearly 5% this week. US West Texas Intermediate crude added 75 cents to stand at $58.66.

Even so, supply cuts – both voluntary and those resulting from US sanctions, kept a floor under prices and some analysts expect the market to recover.

The Organization of the Petroleum Exporting Countries and allies including Russia, an alliance known as OPEC+, have been cutting supply since January to tighten the market and prop up prices.

US sanctions on the oil industries of Iran and Venezuela, both OPEC members, have curbed their crude exports, reducing supplies further than the OPEC+ deal aimed to.

Brent’s price structure remains in “backwardation”, in which prices for prompt delivery are higher than those for later dispatch, suggesting a tight balance between supply and demand.

UBS kept a forecast for Brent to again reach $75 – the year’s high – this month, citing tighter supplies.

“Compliance of OPEC and its allies to the production cut deal remains high, while production from Iran and Venezuela is likely to again trend lower this month,” the bank said.

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