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Last Updated : Sep 08, 2015 09:16 AM IST | Source: Reuters

Weak economic outlook and oversupply weigh on oil markets

Japan's economy shrank an annualised 1.2 percent in April-June, revised GDP data showed on Tuesday, despite ongoing government and central bank measures to support growth.


Oil prices remained weak on Tuesday as the global economic outlook darkened further and cooperation between oil producing countries to curb oversupply looked unlikely.


Japan's economy shrank an annualised 1.2 percent in April-June, revised GDP data showed on Tuesday, despite ongoing government and central bank measures to support growth.


"Oil prices are now expected to stay around current levels until the end of 2015, before rising to the mid to high 50s by the end of 2016," National Australia Bank said in its September commodities note to clients.

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US crude benchmarks were at USD 44.60 per barrel at 0152 GMT, down USD 1.45 since Friday's close, weighed down by the closure of the largest crude distillation unit at Exxon Mobil Corp's 502,500 barrel-per-day (bpd) Baton Rouge, Louisiana, refinery.


US markets were closed on Monday for a holiday.


Not impacted by the refinery outage, Brent futures firmed 32 cents in early trading to USD 47.95 barrel, although the global benchmark was still down USD 1.32 from its opening value on Monday.


Oil prices have fallen almost 60 percent since June 2014 on a global supply glut, with prices seesawing in recent weeks as concerns about a slowing Chinese economy caused turmoil in global stock markets.


Asian stocks edged higher on Tuesday after a six-day losing streak and the dollar firmed against the safe-haven Japanese yen, but gains were muted ahead of Chinese data which could offer more clues on the health of its economy.


On the supply side for oil, recent speculation that Russia might be willing to cooperate with the Organization of the Petroleum Exporting Countries (OPEC) to curb output in support of prices was given a blow on Monday after the chief executive of Russian oil major Rosneft ruled out a Russian cut.


Igor Sechin said that unlike the Middle East, where most oil companies are government owned and controlled, Russia could not easily cut its output as its oil firms had strong foreign shareholders and the corporations were responsible to shareholders rather than the government.


OPEC is producing close to record volumes to squeeze out competition, especially from US shale producers, which have so far weathered the price plunges to keep pumping oil.



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First Published on Sep 8, 2015 09:16 am
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