Oil Futures Retreat on Concern over Global Economic Growth

    

   WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange nearest delivered oil 
futures and Intercontinental Exchange Brent futures settled Friday's session 
lower, with West Texas Intermediate and Brent slipping from four-month highs, 
as reports of a manufacturing slump in the Eurozone fuels slowdown worries.

   NYMEX WTI May contract closed $0.94 lower to trade near $59.04 bbl, while 
ICE Brent May futures settled $0.83 down to $67.03, although both benchmarks 
remain in an uptrend. Spot ULSD April contract tumbled 2.12cts to $1.9659 
gallon, while RBOB April futures moved 0.56cts higher to $1.9259 a gallon, 
while gaining 3.7% on the week.

   Oil futures ended the session lower amid renewed concerns over the global 
economy following bearish industrial data from Germany and France, along with 
slowing growth in the U.S. manufacturing sector. The Eurozone Purchasing 
Managers composite flash index dipped to 51.3 in March from 51.9 in February, 
spurred by a sharp slowdown in Germany's PMI to a six--year low this month. In 
France, manufacturing sector sank into contraction in March, down to 49.8 
versus 51.4 expected, as yellow vests protests continue to hammer the French 
economy. Economic weakness in Germany appears to be external, with Chinese 
export orders pressured due to trade tensions, tariffs and weaker global 
growth. The European Central Bank already responded with policy measures by 
cutting its growth forecasts for Eurozone to 1.1% in 2019, extending sub-zero 
interest rates and offering new cheap loans to banks. 

   In the United States, U.S. PMI composite flash index dipped from 55.8 in 
February to 55.2 this month, a 21-month low, as the gap between manufacturing 
and sector industries appear to have widened in the first quarter. 

   Friday's U.S. PMI underscores the uncertainty over the progress in reaching 
a U.S.--China trade deal that has been on rocky ground since February. U.S. 
President Donald Trump said this week U.S. tariffs on Chinese imports would 
remain even after a bilateral agreement is reached for a considerable time to 
ensure Beijing honors terms, a potential sticking point. 

   Following the slew of bearish economic data, Dow Jones Industrial Average 
fell 460 points to 25,502.32, while S&P 500 Index lost 1.9% in end of week 
trading. PMI data out of Germany and France spurred further dollar gains, which 
advanced 0.164 to 96.151 in index trading. 

   Oil futures were bolstered midweek by a large 9.6 million bbl draw in U.S. 
commercial crude inventories during the week-ended March 15, leaving the stocks 
at the lowest level since January at 439.5 million bbl, according to Energy 
Information Administration. Saudi Arabia, de-facto leader of Organization of 
the Petroleum Exporting Countries have deliberately cut exports to the United 
States since Jan. 1 in order to reduce the surplus in U.S. crude stockpiles, 
which has narrowed a sharp 22.827 million bbl or 67% during the last four 
weeks. 

   Last month, Saudi Arabia shipments to U.S. refineries were 1.6 million bbl 
against 5.75 million bbl a year ago according to Bloomberg data. 

   Friday afternoon, Baker Hughes reported the number of rigs drilling for oil 
in the United States declined for the fifth consecutive week, down nine to an 
824 11-month low. The U.S. oil rig count is down 33 over the most recent 
five-week period and 61 year-to-date, while up 20 against year ago. Even though 
the rig count has fallen, U.S. production climbed by more than 1.7 million bpd 
on the year to a record 12.1 million bpd in the week ended March 15, surpassing 
output by Russia and Saudi Arabia. 

   Liubov Georges, 1.646.359.4088, liubov.georges@dtn.com, www.dtn.com. (c) 
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