Investing.com -- Oil prices bounced along near two-month lows on Thursday, still hit by fears that the global economic slowdown will again leave the market awash in too much crude next year.
By 8:12 AM ET (1212 GMT), U.S. benchmark U.S. benchmark futures prices were at $52.38 a barrel, down 0.4% on the day and close to the two-month low of $52.26 that they hit overnight. Prices are now below where they were before the drone attack on Saudi Arabian oil installations in early September.
Brent crude futures, the international benchmark, were at $57.45 a barrel, also down 0.4% on the day and also below the $60 level that many European and U.S. majors take as their benchmark.
The impact of the Saudi attacks on physical supply has now unwound more or less completely. Saudi Oil Minister Prince Abdulaziz bin Salman told a conference in Moscow Thursday that the kingdom’s output had stabilized at 9.9 million barrels a day, and that it now has another 1.4 million barrels a day of spare capacity.
At the same conference, Russian Energy Minister Alexander Novak said there was no need for any immediate change to the so-called OPEC+ agreement on output restraint that is currently keeping 1.2 million barrels a day of crude off world markets.
That’s despite increasing signs of a slowdown in global demand growth. Novak said in an interview published on Wednesday that he still expects global demand to grow by 1.4 million barrels a day, whereas the International Energy Agency expects 1.3 million b/d but warns that demand is “fragile”.
The OPEC+ group is due to review its agreement in the first week of December, while the agreement itself is due to run through the end of March 2020.
Private expectations are even more downbeat. UBS Global Wealth Management expects growth of just 0.9 million b/d both this year and next, with solid growth in the U.S., Norway and Brazil leading the market from undersupplied to oversupplied. That will translate into a U.S. crude price of $50 a barrel within six to 12 months, says UBS strategist Giovanni Staunovo. In other words, a decline “into the cost curve of short-cycle U.S. shale production.”