Crude oil prices are under pressure again as global growth fears seem to outweigh oil production cutbacks. Weak industrial profits in China and the International Monetary Fund (IMF) potentially lowering its growth forecast. National Bureau of Statistics (NBS) said profits earned by Chinese industrial companies declined 8.8 percent in August from a year ago raising concern about more contraction in energy demand in China.
It is being reported that IMF Chief Christine Lagarde gave an interview in Les Echos that said, "We are in a recovery process whose pace is decelerating. There is a shift between emerging countries and developed countries. The first ones, who were driving a global recovery not so long ago, are slowing down. The others are seeing their momentum accelerate. This should lead us to revise downwards our growth forecasts. A forecast of 3.3% growth this year is no longer realistic. A forecast of 3.8% for next year neither. We will however remain above the 3% threshold," she said.
Yet while the market is weak on growth fears production cuts are still in the back drop. Not only did we see another drop in oil rig counts. Royal Dutch Shell is packing it up in offshore Alaska. After spending more than 7 billion dollars on this project, disappointing exploratory wells and a constantly changing regulatory environment is causing the company to cut their losses.
Baker Hughes reported that the oil rig count fell by 4 last week. That is the fourth week in a row. The number of rigs drilling for oil fell to 640, down from 1,592 a year ago. That’s is signaling that oil production in the US will continue to fall.
Natural Gas is getting a bounce on some hot weather.